The Federal Reserve voted for a 10th straight time Wednesday to keep a key U.S. interest rate at a record low “target range” of zero to 0.25%.
The Fed last held the federal funds interest rate — the rate that banks charge each other —in December; it had first lowered rate to the zero range a year earlier, in December 2008.
The lowering of the followed the Fed’s lowering the rate in June to the historic record low rate and holding it there at its previous four meetings this year, the most recent in June.
In contrast to previous decisions, there was dissenting vote, Thomas Hoenig, who believed that economic and financial conditions had changed sufficiently that the expectation of exceptionally low levels of the federal funds rate for an extended period was no longer warranted, the Fed said in its statement.
Information from the Federal Open Market Committee’s meeting in December suggests that economic activity has continued to strengthen and that the deterioration in the labor market is abating, the Fed said.
It said household spending is expanding at a moderate rate but remains constrained by a weak labor market, modest income growth, lower housing wealth, and tight credit. Business spending on equipment and software appears to be picking up, but investment in structures is still contracting and employers remain reluctant to add to payrolls.
