The US Federal Reserve kept key interest rates unchanged this evening but said the recent slowdown in the world's biggest economy has not been sufficient yet to declare victory in its fight against inflation.
The central bank's move, largely anticipated by financial markets, leaves the key overnight fed funds bank lending rate, which sets the standard for credit costs throughout the economy, at 6.5%, where it has been since May. The more symbolic discount rate on Fed loans to commercial banks remains at 6%.
The Fed said that while softer demand and tighter financial market conditions indicated the economy could continue to grow below its actual potential for a while, the slowdown had not been enough to merit a change in its long-standing view that inflation remains the number one economic threat. That disappointed some in financial markets who had hoped for a more straightforward all clear on the inflation front.
