May 9, 2007 FOMC Statement

Target rate 5.25% unchanged Vote 10–0 Tone: Leaning hawkish +0.51

FOMC statement

For immediate release

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

~~Recent indicators have been mixed~~ Economic growth slowed in the first part of this year and the adjustment in the housing sector is ongoing. Nevertheless, the economy seems likely to ~~continue to~~ expand at a moderate pace over coming quarters.

~~Recent readings on core~~ Core inflation ~~have been~~ remains somewhat elevated. Although inflation pressures seem likely to moderate over time, the high level of resource utilization has the potential to sustain those pressures.

In these circumstances, the Committee's predominant policy concern remains the risk that inflation will fail to moderate as expected. Future policy adjustments 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; Thomas M. Hoenig; Donald L. Kohn; Randall S. Kroszner; Cathy E. Minehan; Frederic S. Mishkin; Michael H. Moskow; William Poole; and Kevin M. Warsh.

Source

Our summary

What changed

The FOMC changed the economic growth description from 'mixed' to noting a slowdown in the first part of the year.
The phrase 'the economy seems likely to continue to expand' was simplified to 'seems likely to expand'.
The phrase 'Recent readings on core inflation have been somewhat elevated' was shortened to 'Core inflation remains somewhat elevated'.
All other policy language, including the rate decision and the voting, was unchanged.

Implications

The revised language signals a slightly more downbeat near-term economic assessment, acknowledging a slowdown while still projecting moderate expansion. The persistent emphasis on elevated core inflation and resource utilization suggests the FOMC remains vigilant about inflation risks, with future policy adjustments still data-dependent.

Summary generated automatically from the statements. Not investment advice.