The cut, the seventh since September, was modest by recent standards, reflecting upward pressure on inflation from higher food and energy prices and the weak dollar. Those trends suggest further rate cuts might do more harm than good in the months ahead...Dallas Fed President Richard Fisher and Philadelphia Fed President Charles Plosser dissented for a second-straight meeting, this time favoring no change in rates. It's the sixth-straight dissent Fed Chairman Ben Bernanke has faced on a fed funds decision.
"Economic activity remains weak," the Fed said, citing "subdued" spending and a "further" softening in labor markets. Markets "remain under considerable stress," the Fed said.
Barring an unforeseen collapse in the economy or financial markets, rates will probably stay where they are for several months at least, though the Fed left the door open to more cuts if needed...
But the economy still faces many headwinds, and any recovery looks more like a slow "U" than a rapid "V" shape. Housing is unlikely to rebound before 2009 at the earliest, and employment declines -- along with soaring food and gasoline prices -- have weighed on consumer confidence and spending. That leaves exports, aided by the weak dollar, as one of the sole sources of support for the economy.
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