WASHINGTON — Citing a credit crunch and soft labor market, theFederal Reserve's Open Market Committee voted 9-1 Wednesday to keepinterest rates the same.

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“Upside risks to inflation and inflation expectations haveincreased,” the Fed said in a policy statement. “In light of thecontinued increases in the prices of energy and some othercommodities and the elevated state of some indicators of inflationexpectations, uncertainty about the inflation outlook remainshigh.”

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The decision keeps the rate banks use when lending to eachother, at 2%. It's the first time the committee has left ratesunchanged since last summer. The panel has voted rate reductionsseven consecutive times.

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The sole dissenter in the vote was Dallas Federal Reserve BankPresident Richard Fisher.

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“Although downside risks to growth remain, they appear to havediminished somewhat,” the Fed said.

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Economists for the two largest credit union trade associationssaid the decision was good for credit unions.

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“We will still have short-term rates that are below long-termrates which is good for credit unions because the short term ratesdrive what they have to pay on deposits while long term rates havea bigger influence on that they earn on loans,” said CUNA ChiefEconomist Bill Hampel.

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“The cost of funds will get lower for credit unions and thiswill give them a chance to catch up. They can be competitive on CDrates,” said Tun Wai, NAFCU's director of research and chiefeconomist.

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