Thought Leadership

Market Review and Outlook 3rd Quarter 2005

October 28, 2005

The Federal Reserve continued its campaign to increase short term rates in September resulting in the end of the resistance of long rates to the Fed actions.  Surprising some who thought they may skip a turn in deference to the destruction brought about by Hurricane Katrina, Fed governors continued its program of one-quarter point increases in the overnight bank rate.  They assumed that while the resulting disruptions to employment and consumption would be temporary, “higher energy and other costs have the potential to add to inflation pressures.”  We continue to monitor inflation pressures to determine if the current environment reflects a temporary phenomenon or the beginning of a longer trend.