Federal Open Market Committee Statement 08/08/06

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The Federal Open Market Committee decided today to keep its target for the federal funds rate at 5-1/4 percent.

Economic growth has moderated from its quite strong pace earlier this year, partly reflecting a gradual cooling of the housing market and the lagged effects of increases in interest rates and energy prices.

Readings on core inflation have been elevated in recent months, and the high levels of resource utilization and of the prices of energy and other commodities have the potential to sustain inflation pressures. However, inflation pressures seem likely to moderate over time, reflecting contained inflation expectations and the cumulative effects of monetary policy actions and other factors restraining aggregate demand.

Nonetheless, the Committee judges that some inflation risks remain. The extent and timing of any additional firming that may be needed to address these risks will depend on the evolution of the outlook for both inflation and economic growth, as implied by incoming information.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Timothy F. Geithner, Vice Chairman; Susan S. Bies; Jack Guynn; Donald L. Kohn; Randall S. Kroszner; Sandra Pianalto; Kevin M. Warsh; and Janet L. Yellen. Voting against was Jeffrey M. Lacker, who preferred an increase of 25 basis points in the federal funds rate target at this meeting.

Release Date: August 8, 2006, For immediate release.

RELATED: Friday, June 30, 2006 Federal Open Market Committee Statement 06/29/06, Wednesday, May 10, 2006 Federal Open Market Committee Statement 05/10/06, Tuesday, March 28, 2006 Federal Open Market Committee Statement 03/28/06, Wednesday, February 15, 2006 Chairman Ben S. Bernanke, Semiannual Monetary Policy Report, Monday, February 06, 2006 President Attends Swearing-In Ceremony for Federal Reserve Chairman Ben Bernanke VIDEO, Monday, October 24, 2005 Appointment Ben Bernanke Federal Reserve (VIDEO), Monday, October 24, 2005 Biography of Dr. Ben S. Bernanke, Tuesday, June 21, 2005 President Congratulates CEA Chairman Ben Bernanke (VIDEO)