Fed Leaves Interest Rates Unchanged

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

The Federal Reserve on Tuesday voted to keep the benchmark U.S. interest rate unchanged, encouraged by signs that the lowest borrowing costs in 45 years may be helping the economic expansion to accelerate, Bloomberg reported.

Members of the Federal Open Market Committee left the overnight bank lending rate at 1%, the lowest since July 1958. They again split their outlook for growth from the inflation forecast.

The committee perceives that the upside and downside risks to the attainment of sustainable growth for the next few quarters are roughly equal,” the Fed said in a statement.

If low rates lead to more spending by businesses and consumers, it will force manufacturers to increase production. That, in turn, pushes up the demand for the services of trucking companies.

The central bankers are still concerned that prices are rising at an ever-slower pace, suggesting rates will remain on hold for some time, Bloomberg said.

The Fed had cut rates 13 times since January 20001. However, economists do expect the central bank to leave the overnight rate at 1% for at least the remainder of the year, Bloomberg said. 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 still-robust underlying growth in productivity, is providing important ongoing support to economic activity.

The evidence accumulated over the intermeeting period shows that spending is firming, although labor market indicators are mixed. Business pricing power and increases in core consumer prices remain muted.

The Committee perceives that the upside and downside risks to the attainment of sustainable growth for the next few quarters are roughly equal. In contrast, the probability, though minor, of an unwelcome fall in inflation exceeds that of a rise in inflation from its already low level.

The Committee judges that, on balance, the risk of inflation becoming undesirably low is likely to be the predominant concern for the foreseeable future. In these circumstances, the Committee believes that policy accommodation can be maintained for a considerable period.

Voting for the FOMC monetary policy action were: Alan Greenspan, Chairman; Ben S. Bernanke; Susan S. Bies; J. Alfred Broaddus, Jr.; Roger W. Ferguson, Jr.; Edward M. Gramlich; Jack Guynn; Donald L. Kohn; Michael H. Moskow; Mark W. Olson; Robert T. Parry; and Jamie B. Stewart, Jr.