In their latest release, The Federal Open Market Committee (FOMC) announced that it has decided to maintain the target range for the federal funds rate at 0.25 to 0.5 percent and the prime rate will remain at 3.5 percent.
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While eight of the committee members voted for this action, two members of the board voted to raise the target range for the federal funds rate to 0.5 to 0.75 percent, Esther L. George and Loretta J. Mester.
Mester, president of the Federal Reserve Bank of Cleveland, also voted to raise the federal funds rate back in September. At the time, she said she expected inflation to continue to rise, and she noted that the Fed’s monetary has “long and variable lags.”
She continued to echo this sentiment today, saying “This means policy actions need to be taken before our policy goals are fully met.”
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Federal Reserve Board Chair Janet Yellen will hold a news conference after the committee’s next meeting scheduled for Dec. 13-14.
The Federal Reserve often referred to as “the Fed” is the central bank of the United States. Congress created the Fed in 1913 to help promote a safe and sound monetary and financial system for our nation. The Fed includes the Board of Governors in Washington D.C. which has seven members including the Chairman and Vice Chairman. All of the members of the Board are appointed of the President of the United States and confirmed by the United States Senate. The Fed also includes 12 regional Federal Reserve Banks located in cities throughout the country. The Reserve Banks serve as the central banks’ operating arms and also gather economic information from all over the country to help the Fed both monitor the economy and get the broad input necessary to develop and implement effective U.S. monetary policy.