Though the economy is recovering and the labor market is improving, the economy is still hurt by high unemployment and modest income growth. Those problems are the reason the Federal Reserve cited when it announced today 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 said "the pace of the recovery is likely to be moderate for a time," and inflation is "likely to be subdued for some time."
As was the case last two times the committee met, 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 low for an extended period could cause a lead up to future imbalances and risks long-term financial stability, according to a news release from the Fed.
