US Fed Leaves Short-term Interest Rate Unchanged

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Last updated at: (Beijing Time) Wednesday, August 14, 2002

US Fed Leaves Short-term Interest Rate Unchanged

The US Federal Reserve (Fed) Tuesday left the short-term interest rate unchanged at 1.75 percent, the lowest level in 40 years.

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The US Federal Reserve (Fed) Tuesday left the short-term interest rate unchanged at 1.75 percent, the lowest level in 40 years.

But the Fed signaled that it stands ready to cut short-term rates in the future if economic conditions worsen.

"The risks are weighted mainly toward conditions that may generate economic weakness," the Fed said in a statement.

The Fed said that the greatest risk looking ahead is economic weakness and low rates "should be sufficient to foster an improving business climate over time."

By keeping rates low or possibly nudging them down later, US federal policymakers could expect consumers to be motivated to spend more and businesses to step up investment. Such a combination of circumstances would boost the recovery, which has lost momentum from the beginning of the year.

The Fed's decision comes amid economic uncertainties, a unstable stock market and anxiety among Americans about the economy's direction.

Since its March meeting, the US central bank's announcement indicated that economic risks were equally balanced between inflation and possible weak growth.

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