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U.S. Fed leaves key interest rate unchanged at 5.25 percent |
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08:01, August 08, 2007 |
The U.S. Federal Reserve decided Tuesday to leave a key interest rate unchanged at 5.25 percent, where it has stood for a year.
This was the ninth consecutive time that the central bank held the federal funds rate, interest commercial banks charge each other on overnight loans, steady at 5.25 percent since late June 2006.
After boosting rates at its 17 regular policy-setting meetings in a row over two years, the Fed paused in August last year and left rates alone in the following months.
As a result of the Tuesday''s decision, commercial banks'' prime lending rate, the benchmark for millions of consumer and business loans, will remain at 8.25 percent. The prime rate responds to changes in the federal funds rate.
A statement issued Tuesday by the Fed showed that the central bank is still concerned more about inflationary pressures than slowdown in housing market.
In the statement, the Fed said the economic growth was moderate during the first half of the year and financial markets have been volatile in recent weeks, credit conditions have become tighter for some households and businesses, and the housing correction is ongoing.
However, "the economy seems likely to continue to expand at a moderate pace over coming quarters, supported by solid growth in employment and incomes and a robust global economy," said the statement.
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