No Rate Increase

August 10, 2006

The Federal Reserve kept the benchmark U.S. interest rate at 5.25 percent, ending a record two-year run of increases. The rate was 1 percent when policy makers began a series of 17 consecutive quarter-point moves in June 2004. New data show slower economic and job growth, while a drop in Treasury yields over the past month indicates investors are expecting the Fed to take a break from rate increases. Key to the slowing economy has been a cooling housing market. Since the Fed began raising rates, the average rate on a one-year adjustable mortgage has jumped to 5.69 percent from 4.13 percent, according to Freddie Mac.


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