Fed Keeps Interest Rate As Is
Policy Makers Faced With Dueling Economic Problems
POSTED: Tuesday, August 5, 2008
UPDATED: 4:05 pm EDT August 5,
2008
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WASHINGTON -- The Federal Reserve left a key interest rate unchanged Tuesday at 2 percent for a second straight meeting.Rising unemployment, spiking foreclosures and gyrating energy prices likely weighed on the Federal Reserve as it considered monetary policy. The central bank policy makers are faced with the dueling problems of weak economic growth and advancing inflation.According to the Federal Reserve, inflation has been high, as of a result of earlier increases in the prices of energy and some other commodities, and some indicators of inflation expectations have been elevated. The Committee expects inflation to moderate later this year and next year, but the inflation outlook remains highly uncertain.To treat one risks aggravating the other. So, the Fed was widely expected to leave the rate alone. The prime lending rate for millions of consumers and businesses also stayed put, at 5 percent.The prime rate applies to certain credit cards, home equity lines of credit and other lines.
Distributed by Internet Broadcasting Systems, Inc. The Associated Press contributed to this report. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
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