Fed Wimps Out; MMF Assets Fall
The Federal Reserve Board did not raise interest rates on Thursday, despite much speculation that it would. It cited concerns over inflation and “developments abroad.” The statement from the Federal Open Market Committee says, "To support continued progress toward maximum employment and price stability, the Committee today reaffirmed its view that the current 0 to 1/4 percent target range for the federal funds rate remains appropriate. In determining how long to maintain this target range, the Committee will assess progress -- both realized and expected -- toward its objectives of maximum employment and 2 percent inflation. The Committee anticipates that it will be appropriate to raise the target range for the federal funds rate when it has seen some further improvement in the labor market and is reasonably confident that inflation will move back to its 2 percent objective over the medium term." In other news, the September swoon continues for money market mutual fund assets as they decreased for the third straight week, according to ICI's latest "Money Market Mutual Fund Assets" report. Once again, Treasury funds took a major hit, dropping $11 billion after falling $11 billion last week. The release says, "Total money market fund assets decreased by $16.23 billion to $2.65 trillion for the week ended Wednesday, September 16, the Investment Company Institute reported today. Among taxable money market funds, Treasury funds (including agency and repo) decreased by $11.05 billion and prime funds decreased by $3.61 billion. Tax-exempt money market funds decreased by $1.56 billion. Assets of retail money market funds increased by $2.04 billion to $898.84 billion. Among retail funds, Treasury money market fund assets increased by $920 million to $205.00 billion, prime money market fund assets increased by $2.00 billion to $513.48 billion, and tax-exempt fund assets decreased by $890 million to $180.35 billion. Assets of institutional money market funds decreased by $18.26 billion to $1.75 trillion. Among institutional funds, Treasury money market fund assets decreased by $11.98 billion to $763.00 billion, prime money market fund assets decreased by $5.61 billion to $917.51 billion, and tax-exempt fund assets decreased by $670 million to $67.04 billion." Year-to-date, money fund assets are down $87 billion, or 3.2%. Month-to-date from September 3, MMF assets are down $32 billion.
