DAILY ECONOMIC DATA

As we expected, the Federal Reserve left the federal funds target rate unchanged at 5.25% and maintained its balance of risks toward inflation rather than slower economic growth.

However, the statement from the FOMC included some noteworthy changes, as follows:

(1) The Fed acknowledged that financial markets have been volatile lately and that credit conditions have become tighter for "some" households and businesses.

(2) Rather than merely stating that it foresees moderate economic growth, the Fed noted its reasons for believing this, in particular "solid growth in employment and incomes and a robust global economy." This suggests the Fed is not overly concerned about consumption growth at this time and believes international trade will remain supportive of real GDP growth in the near to medium term.

(3) Even with these reasons for expecting moderate growth, the Fed gave a nod to elevated risks by saying that the downside risk to economic growth has "increased somewhat" since the previous meeting in late June.

Despite these changes, the Fed did not alter the paragraph on inflation, reiterating that "a sustained moderation in inflation pressures has yet to be convincingly demonstrated."