Money and Metals

The FOMC decision is in. "The Federal Reserve on Tuesday left a key interest rate unchanged, marking at least a temporary pause in what had been the longest unbroken stretch of Fed rate increases in recent history. It was the first time the Fed had met and not raised rates in more than two years."

"However, the relief for millions of business and consumer borrowers could be only temporary. The central bank said that 'some inflation risks remains,' holding out the possibility that it could resume raising rates at future meetings."

"In 17 consecutive meetings stretching from June 2004 through June 2006, the Fed boosted the funds rate from a 46-year low of 1 percent to the current 5.25 percent, all in an effort to slow the economy enough to keep inflation under control."

"The Fed's decision to finally pause had been widely anticipated given the signs of a spreading economic slowdown, in part reflecting the impact of the Fed's long string of rate hikes."

The Financial Times. "The US dollar held firm on Tuesday as the Federal Reserve held rates for the first time in two years and suggested that inflation pressures 'seem likely to moderate over time.' The accompanying statement was modestly more dovish than expected, leading the futures market to scale back the chances of a rise in September instead."

"'The statement was slightly less hawkish than the market was expecting, particularly on inflation,' said Marc Chandler, head of global currency research at Brown Brothers Harriman."

"However, after a knee-jerk sell-off, the dollar recovered to sit little changed on the day at $1.2834 to the euro, Y115.15 against the yen and $1.9073 against sterling. The greenback also rose 0.3 per cent to $0.7611 against the Australian dollar."

"Gold futures rose slightly in after-hours trade Tuesday after the Federal Reserve left rates on hold. Gold for December delivery was up 70 cents at $657.80 an ounce. Jon Nadler, at Kitco.com, described the metal's reaction as 'one of the least eventful' to a Fed decision and said it may not show much response until the end of the week."

"'At this time, the conclusions to be drawn are that the Fed senses sufficient sluggishness on the economic front to allow it to rest at least until such time as external energy shocks work their way into the inflation statistics that it monitors and force it to resume the rate tweaking strategy,' he said.'