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Fed Leaves Rates Unchanged --- Yawwwwwn!

To no one&

By Dr. Joe Webb
Published: March 21, 2007

To no one's surprise, the Fed left things where they are. They did, however, indicate that inflation risks seem a bit higher. Any chance that they will loosen rates, even in the 12 months, are probably gone. What does this mean? The real problem for the Fed has been that the long end of the yield curve has been very stubborn. We still have an inverted yield curve, indicating slow economic growth. In my mind, we will look back at this as the Fed was too tight. Subprime mortgages, the excess in the money supply that they worried about the most, now seem like ancient history. Look for the money supply to start contracting, and the Fed to be skeptical about the permanence of the ease in inflation that is likely ahead. More on Monday... and more in the 4/4 economic webinar.

Dr. Joe Webb is one of the graphic arts industry's best-known consultants, forecasters, and commentators. He is the director of WhatTheyThink.com's Economics and Research Center.

What do you think? Please send feedback to Dr. Joe by emailing him at drjoe@whattheythink.com.

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