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Money and Financial Markets

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An inflation-adjusted overnight interest rate near or below zero is not thought to be sustainable without ultimately inducing inflationary pressures. Thus, the Federal Open Market Committee (FOMC) will eventually need to raise the federal funds rate to a more neutral level. The language of the FOMC’s June 30 meeting indicated that the Committee would do whatever was required to maintain price stability, but given current economic conditions, it anticipated that the fed funds rate could be increased at a “measured” pace.

Suggested citation: "Money and Financial Markets," Federal Reserve Bank of Cleveland, Economic Trends, no. 04-08, pp. 05-07, 08.01.2004.

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