FOMC Statement 05/09/07

Monday, $13.5 B 3 year note auction weak indirect bidder participation of 18% vs prior 32%.

Tuesday, $13 B 10 year note auction strong indirect bidder participation of 44%.

FOMC Statement: Status Quo and rate unchanged.

"Economic growth slowed in the first part of this year and the adjustment in the housing sector is ongoing. Nevertheless, the economy seems likely to expand at a moderate pace over coming quarters.

Core inflation remains somewhat elevated. Although inflation pressures seem likely to moderate over time, the high level of resource utilization has the potential to sustain those pressures.

In these circumstances, the Committee's predominant policy concern remains the risk that inflation will fail to moderate as expected.

Future policy adjustments will depend on the evolution of the outlook for both inflation and economic growth, as implied by incoming information
."

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