While saying that "economic activity has continued to strengthen and that the labor market is stabilizing" but expressing concern about high unemployment and sluggish housing starts and diminishing bank lending, 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 said "the pace of the recovery is likely to be moderate for a time," and inflation is "likely to be subdued for some time."
The panel said it expects to keep rates low for some time.
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As was the case last time 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.
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