Fed holds fire on interest rates

05-08-2008

Fed holds fire on interest rates
The United States Federal Reserve has opted to hold interest rates at two per cent.

The federal funds rate – the interest US banks charge each other – has now been held for the past two months.

A statement from the Fed's open market committee noted a rise in economic activity down to consumer spending and exports but also cited the "highly uncertain" inflationary outlook.

"Labour markets have softened further and financial markets remain under considerable stress," a statement explained.

"Tight credit conditions, the ongoing housing contraction, and elevated energy prices are likely to weigh on economic growth over the next few quarters.

"Over time, the substantial easing of monetary policy, combined with ongoing measures to foster market liquidity, should help to promote moderate economic growth."

Inflation has been boosted in the states by energy and commodities, but the Fed is confident pressure will moderate over the course of 2008.

Only one member of the committee voted against today's hold.

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