FED OPTS TO KEEP RATE @ 5.25%

The Federal Reserve's Open Market Committee yesterday decided to suspend interest rate hikes, maintaining the target for the federal funds rate at 5.25 percent. This is the first committee meeting since June 2004 that did not result in an interest rate increase.

The federal funds target rate is the interest rate charged by banks when they borrow funds "overnight" from each other."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," the Fed said in a prepared statement.

The Fed also indicated the possibility of future interest rate increases, acknowledging 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."

**Taken from the California Association of Realtors Bulletin, dated August 9th, 2006.