Federal Reserve Keeps Interest Rates Steady

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

The Federal Reserve voted Tuesday to keep the benchmark U.S. interest rate unchanged, saying the economy appeared to be improving but the "minor" risk of deflation remained.

Members of the Federal Open Market Committee unanimously left the overnight bank lending rate at 1%, the lowest since July 1958. The lending rate is the interest banks charge each on overnight loans and is the Fed's primary tool for influencing economic activity.

"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 would force manufacturers to increase production. That, in turn, pushes up the demand for the services of trucking companies.

The Fed noted in its statement that although spending is beginning to firm, the labor market has been weakening.

Although it left rates unchanged in August, it 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 robust underlying growth in productivity, is providing important ongoing support to economic activity. The evidence accumulated over the intermeeting period confirms that spending is firming, although the labor market has been weakening. 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 remains 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.

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