Interest rates will remain where they are for the time being.
Wednesday afternoon the Federal Reserve concluded a two-day meeting in which it decided to keep interests rates unchanged, ending a series of 11 cuts that started in January 2001, keeping them at the lowest rate in 40 years.
The move leaves the federal funds rate, the interest banks charge each other on overnight loans, at 1.75%. The more symbolic discount rate, the interest rate the Fed charges to make direct loans to banks, remains at 1.25%.
The Federal Open Market Committee released a statement saying, “Signs that weakness in demand is abating and economic activity is beginning to firm have become more prevalent. With the forces restraining the economy starting to diminish, and with the long-term prospects for productivity growth remaining favorable and monetary policy accommodative, the outlook for economic recovery has become more promising."
The Fed did keep the door open to further interest rate cuts, saying, “The degree of any strength in business capital and household spending, however, is still uncertain. Hence, the Committee continues to believe that, against the background of its long-run goals of price stability and sustainable economic growth and of the information currently available, the risks are weighted mainly toward conditions that may generate economic weakness in the foreseeable future.”
The news comes on the same day the U.S. Commerce Department released figures showing a slight upturn in the country’s Gross Domestic Product in the final quarter of 2001 and news earlier in the week the durable goods shipments and orders are on the mend along with consumer confidence.