The Federal Reserve, navigating treacherous economic waters, decided to leave a key interest rate unchanged, bringing an end to a string of consecutive rate cuts aimed at keeping the country out of a deep recession.
The central bank announced that it was keeping the federal funds rate, the interest rate that banks charge each
other, at 2 per cent, marking the first time in 10 months that the central bank has failed to reduce interest rates at one of its regular meetings.
The Fed is confronted with the twin perils of a possible recession and rising inflation pressures, stemming from this year's surge in oil and food prices.
In a brief statement explaining the decision, Fed Chairman Ben Bernanke and his colleagues cited both the threats to growth and rising inflation pressures as problems confronting the economy at the moment.
The statement said that the downside risks to growth "appear to have diminished somewhat" while adding that "the
upside risks to inflation and inflation expectations have increased."
The Fed action was approved on a 9-1 vote with Richard Fisher, president of the Fed's regional bank in Dallas casting a dissenting vote. Fisher preferred an immediate increase in interest rates to fight inflation.
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