Former Federal Reserve chairman, Alan Greenspan, thinks that the current economic downturn is temporary, according to a report in the Toronto Star. The housing market in particular may not have bottomed out yet but he does not think it will get much worse.

“I think that while we are past most of it there are a lot of negatives … but it is no longer subtracting from the (gross domestic product) growth,” the former Fed chairman said.

For the broader economy, Greenspan offered tempered optimism, citing strong profit margins and capital goods data that are “showing some potency.”

“It’s hard to envisage those two key factors coming at the beginning of a recession,” he said.

He warned that some home buyers might have interest costs increase in the short term, however.

In a statement released today that can be accessed at the Federal Reserve Board Website it was announced that the Feds are going to keep interest rates at 5.25%.

The Federal Open Market Committee decided today to keep its target for the federal funds rate at 5-1/4 percent.

Economic growth has slowed over the course of the year, partly reflecting a cooling of the housing market. Going forward, the economy seems likely to expand at a moderate pace.

The FOMC monetary policy faced only one dissenting vote. Voting against was Jeffrey M. Lacker, who preferred an increase of 25 basis points in the federal funds rate target at this meeting.

Wednesday August 9, 2006 The FTC (Federal Trade Commission) and the Federal Reserve Board issued a joint report to Congress on compliance with the consumer dispute provisions of the Fair Credit Reporting Act.

According to a study conducted by the FTC and the Board, although consumer disputes are being processed within the statutory timeframe, there is some disagreement regarding the adequacy of the investigations performed by the Credit Reporting Agencies and the furnishers of information.

No action is being taken at this time as a result of the report but the FTC and the Board will continue to monitor the dispute process, possibly making recommendations for future action if appropriate.

As expected, the Federal Reserve opted not to raise interest rates hoping to keep inflation down in the flagging economy. The FOMC has announced it will keep its Federal Funds rate target at 5.25 percent.

The statement released today indicated that this was a pause rather than a halt in rate hikes and expressed the opinion that inflation pressures may moderate over time thus implying that rate hikes in the future cannot be ruled out.

The pause by the Fed was not unexpected by investors, although the possibility of future rate increases was disappointing and stocks slipped after the announcement.