ICS Magazine

Fed keeps U.S. rates steady, says risks balanced

June 26, 2002
WASHINGTON, June 26 (Reuters) - Federal Reserve policymakers decided on Wednesday to keep U.S. interest rates unchanged at four-decade lows, biding their time as they await signs that a full-throttle recovery is in place.

The Fed's policy-setting Federal Open Market Committee announced at the close of a two-day meeting that it voted unanimously to maintain its trend-setting federal funds rate at 1.75 percent. The more symbolic discount rate, charged to banks for loans directly from the Fed, was also unmoved at 1.25 percent.

In its statement, the Fed said it saw demand picking up but said the degree of strengthening remained uncertain. It said risks were equally balanced between recession and a flare-up in inflation, a stance unchanged from the last meeting on May 7.

U.S. interest rates have stood at this level since last December and most economists believe the central bank will not raise borrowing costs until near year-end. The widely expected decision came amid growing market unease stemming partly from a mounting toll of accounting scandals and with the economy still edging ahead only unevenly.