US Fed Keeps Interest Rates Stable

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Last updated at: (Beijing Time) Wednesday, September 25, 2002

US Fed Keeps Interest Rates Stable

The US Federal Reserve (Fed) decided Tuesday to keep the short-term interest rates stable, the sixth time when the Fed left the interest rates unchanged this year.

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The US Federal Reserve (Fed) decided Tuesday to leave a key interest rate unchanged as the US economic recovery is struggling.

It was the sixth time when the US Fed left the short-term interest rate unchanged this year. The federal funds rate in the US has remained stable at 1.75 percent since last December.

The Fed said in a statement that economic information since its last meeting on Aug. 13 suggested that consumer and business demand is "growing at a moderate pace." The Fed's currently low interest rates and gains in productivity should be "sufficient to foster an improving business climate."

However, the Fed said that "considerable uncertainty persists about the extent and timing of the expected pickup in production and employment owing in part to the emergence of heightened geopolitical risks."

Analysts said that it means the Fed continued to leave the door open to future rate reductions if economic conditions worsen.

Two Fed members voted against the Fed's decision to leave rates unchanged. They wanted to see the funds rate lowered.

The US Fed cut the federal funds rate for 11 times last year to help the US economy get out of recession and has kept the rate unchanged at its 41-year-low this year.

The Fed's decision to hold the funds rate steady also means that commercial banks' prime lending rate -- the benchmark for many loans -- will remain at 4.75 percent, the lowest level since November 1965.

The US economy grew at a rate of just 1.1 percent in the second quarter after a strong increase in the first three months of this year. Many signs has showed that the economic recovery remains weak in the current quarter.

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