Fed Divisions Led to a Compromise on Interest Rates

At the Federal Reserves’ meeting this month, a broad of disagreements occurred on the interest rate. In the end, the Federal Open Market committee took a middle ground and decided to keep interest around zero till mid-2013. Since the divisions, the Federal members decided to hold a meeting again during September to have more time to discuss this issue. This meeting also assessed the disappointing economic performance for the past summer and the downgrading economic growth in the next few months. The interest rate has been keeping this low for the past two years and it is not good to the economic because this policy cannot stimulate economy anymore. Under the Depression, the prolonged low interest rate is just going to make the economic worse.