The Federal Reserve held the line on Tuesday–leaving the Fed Funds Rate at 2.00% for the third straight meeting. The decision, however, was anything but cut-and-dry. Earlier in the week, the Personal Consumption Expenditure data indicated that inflation climbed 0.8% overall in June, which is the highest inflation jump in 27 years. In addition, the report indicated that inflation now sits at 2.3%–above the Fed's desired range of 1-2%. Although the Fed ultimately left interest rates unchanged, inflation obviously remains a concern and the recent rise may lead to an interest rate hike by the Fed in the near future.
As expected, the European Central Bank and the Bank of England left their benchmark interest rates unchanged today (Thursday 8/7/08) at 4.25% and 5% respectively. Inflation remains stubbornly high in these regions, so both the ECB and Bank of England are unable to hike rates and fight inflation because they are up against similar pressures we are seeing here in the
