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Afternoon Update 9/16/08

Mortgage rates moved higher following the Fed’s announcement that it would leave interest rates unchanged. Traders had been expecting a 25 basis point (1/4%) decrease in the Fed Funds Rate. The Federal Open Market Committee cited growing concerns over inflationary pressures in explaining their decision. While some analysts may be disappointed by the news, maintaining price stability is one of the key roles of the Fed. Holding short-term rates steady should help bolster the dollar and contain inflation, which may be beneficial in keeping a lid on long-term interest rates.

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