![]()
- Job Market Politics to Keep Interest Rates Low
- AIG, Symbol of Crisis, Watches Its Stock Zoom Back
- Disney Profit, Sales Top Street Forecasts; Shares Jump
- Cities With the Most Home Price Reductions
- Cramer: The Real Reason Stocks Fell Thursday
- Is Euphoric Market Ignoring Warning Signs?
- Video Game Sales Plunge, but Have They Hit Bottom?
- Despite Rhetoric, Obama Has Few Options to Boost Jobs
- US Debating What to Do With Billions of TARP Money Left
- Gold Is a Bad Inflation Hedge—Like Oil: Stock Picker
- Intel's Andy Bryant Offers An Explanation
- US 'Actively Working' on Weaker Dollar: Fund Manager
- Options Boil on Biotech Buyout Rumors
- Warren Buffett's $100,000 Offer and $500,000 Advice for Columbia Business School Students
- Activision Blizzard's "Modern Warfare 2" Sales Break Records
- 5-Star Manager's 5 Stocks for Changing Markets
- What's The Forecast from Retailers? Proceed With Caution
- Disney's CFO-Theme Park Chairman Executive Swap
MOST SHARED
- Warren Buffett and Bill Gates Share Their 'Optimism' With Eager Columbia Business Students
- Meet The Leaders of the New Retail Revolution
- Cities With the Most Home Price Reductions
- Disney Profit, Sales Top Street Forecasts; Shares Jump
- Warren Buffett's $100,000 Offer and $500,000 Advice for Columbia Business School Students
- Disney CFO and Parks Chief to Swap Roles
- Is Euphoric Market Ignoring Warning Signs?
- Despite Rhetoric, Obama Has Limited Options To Boost Jobs
- Housing Recovery 'Still In Uncharted Territory': HUD Secretary
The U.S. Federal Reserve held benchmark interest rates steady on Wednesday and said it remained concerned on inflation, but it downgraded its assessment of current economic conditions and left its future policy options open.
The widely expected decision by the central bank's Federal Open Market Committee keeps the overnight federal funds rate target at 5.25%, the level it hit in June after 17 straight quarter-percentage point increases.
In a statement outlining its decision, the Fed dropped a reference that had been contained in its last policy announcement to the possibility of further "firming" of monetary policy, saying simply: "Further policy adjustments will depend on the evolution of the outlook."
Changes in the Federal Funds Rate (since 2006) |
| Date | Rate | Change |
| Jan 31, 2006 | 4.50 | + 0.25 |
| Mar 28, 2006 | 4.75 | + 0.25 |
| May 10, 2006 | 5.00 | + 0.25 |
| Jun 29, 2006 | 5.25 | + 0.25 |
| Sep 18, 2007 | 4.75 | - 0.50 |
In addition, the central bank offered a nod to recent signs suggesting the economy is moving ahead only slowly.
"Recent indicators have been mixed and the adjustment in the housing sector is ongoing," the Fed said. "Nevertheless, the economy seems likely to continue to expand at a moderate pace over coming quarters."
Prices for U.S. stocks and government bonds rose, while the dollar fell, as traders in financial markets saw the Fed's shifts in language opening the door to possible rate cuts later in the year.
Still, the Fed said it had not put away its inflation concerns. "The committee's predominant policy concern remains the risk that inflation will fail to moderate as expected," it said.
"More Good Than Bad"
"On balance I think there was more good than bad in the statement," Arthur Hogan, managing director at Jefferies, told CNBC.com. "The Fed sort of leaned in the direction that inflation will ease moving forward and that was reassuring. There was enough balance in the statement to indicated that the Fed is as likely to ease as tighten."
At its previous meeting in January, the central bank had said growth was looking "somewhat firmer." Since then, however, a jump in default rates for mortgages held by less-creditworthy borrowers has sparked worry that mainstream lenders might start having trouble and that it might become more difficult for households and businesses to borrow.
Beyond the subprime sector, there has been little to support the view that housing markets were stabilizing, as the Fed had believed.
A report three weeks ago showed sales of new homes had tumbled almost 17% in January, the largest slide in 13 years, while data this week showed that permits for future home building fell in February.
Meanwhile, a sharp sell-off of U.S. stocks late last month added to worries that consumers, already feeling pinched by stagnating or falling home values, might rein in spending, putting an additional drag on the economy.
Worries About Inflation
Against evidence of weaker growth, there was scant reassurance inflation was moderating as the central bank had hoped.
The 12-month change in the so-called PCE price index, the inflation measure preferred by Fed policy-makers, moved up to 2.3 percent in January from 2.2% in December, above the 1% to 2% comfort zone of many officials.
The Federal Reserve left a key interest rate unchanged on Wednesday while taking note of the recent weaker economic performance and higher inflation pressures.
The central bank voted to leave the federal funds rate, the interest that banks charge each other, at 5.25%. It marked the sixth straight meeting in which the Fed has kept the rate the same.
As it has at previous meetings, the Fed said it was more worried about the risk of inflation than weak economic growth. But this time it dropped language that talked solely about the possibility that interest rates would be increased in the future.
Economists believe it is highly unlikely that the Fed will boost rates in coming months, given troubles in the housing industry and sluggish economic growth.
- Warren Buffett and Bill Gates spoke to Columbia students, and Buffett made the students a startling offer.
- They may have wrecked their companies or saved our economy. Tell us what you think.
- Big pharma embraces social media, but how much should a tightly regulated sector say on Facebook or Twitter?
- A European dating site finds lovelorn singles from one country to be consistently uglier. Which is it?
- Contributor David Pogue looks at two of the latest efforts to perfect the digital pocket camera.
- PepsiCo is ramping up its onsite health facilities for workers.












