Fed Keeps Rates Steady; Says It Can Remain 'Patient'

Click here for the full text of statement by the Federal Reserve.

he Federal Reserve on Tuesday voted to leave the benchmark U.S. interest rate at a 45-year low of 1%, and policy makers said they would be "patient" on raising rates as the job market struggles to recover.

The overnight bank-lending rate, also known as the federal funds rate, is the interest banks charge each other on overnight loans and the Fed's main lever for influencing the economy. Low rates can spur consumer and capital spending, which can help the economy and the trucking industry.

"The evidence accumulated over the intermeeting period indicates that output is continuing to expand at a solid pace," the Fed said in its statement. "Although job losses have slowed, new hiring has lagged."

The Fed also said the risk of slowing inflation remains "almost equal" to the danger of accelerating price increases.

In their Jan. 28 policy statement, the central bankers said that while hiring had been subdued, "other indicators suggest an improvement in the labor market."

The Fed last changed the federal funds rate on June 25, with the 13th rate cut since the central bank began trying the head off recession in January 2001. Transport Topics

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Statement by the Federal Reserve

The Federal Open Market Committee decided today to keep its target for the federal funds rate at 1 percent.

The Committee continues to believe that an accommodative stance of monetary policy, coupled with robust underlying growth in productivity, is providing important ongoing support to economic activity. The evidence accumulated over the intermeeting period indicates that output is continuing to expand at a solid pace. Although job losses have slowed, new hiring has lagged. Increases in core consumer prices are muted and expected to remain low.

The Committee perceives the upside and downside risks to the attainment of sustainable growth for the next few quarters are roughly equal. The probability of an unwelcome fall in inflation has diminished in recent months and now appears almost equal to that of a rise in inflation. With inflation quite low and resource use slack, the Committee believes that it can be patient in removing its policy accommodation.

Voting for the FOMC monetary policy action were: Alan Greenspan, Chairman; Timothy F. Geithner, Vice Chairman; Ben S. Bernanke; Susan S. Bies; Roger W. Ferguson, Jr.; Edward M. Gramlich; Thomas M. Hoenig; Donald L. Kohn; Cathy E. Minehan; Mark W. Olson; Sandra Pianalto; and William Poole.

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