While noting that "economic activity has continued to strengthen and that the labor market is stabilizing" but expressing concern about high unemployment and tight credit, the Federal Reserve today announced it was keeping interest rates unchanged.
The Fed's Open Market Committee voted 9-1 to keep the target federal funds rate, the one banks use when lending to each other, at 0% to 0.25%.
According to a statement, the committee "continues to anticipate that economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels of the federal funds rate for an extended period."
Thomas Hoenig, president of the Federal Reserve Bank of Kansas City, was the sole no vote and he said the economy was improving and keeping rates so low could contribute to continued economic instability, according to a news release from the Fed.
By the end of the month, as scheduled the Fed plans to end the program it launched during the recession of purchasing $1.25 trillion of agency mortgage-backed securities and about $175 billion of agency debt.