Container Top
Homes   Jobs   Cars   Shopping
Search

Events Calendar

EVENT SEARCH:

In This Section


Most Read Stories


Blogs:


Akron Law Café:
A Woman in the White House

The Heldenfiles:
"Opportunity Knocks" for Canton Family (Updated)

Patrick McManamon:
The Browns conclude preseason 0-4

Browns Bulletin:
Cliffs Notes: Bears vs Browns Review

Cleveland Browns:
Browns v. Lions: Fourth Quarter

Cleveland Indians:
Ten for ten. Playoffs possible?

Akron Aeros:
Aeros clinch wild card, celebrate

Akron Zips:
Zips top No. 3 Notre Dame

Varsity Letters:
Week 2 football scoreboard

Kent State Sports:
Kent State versus Boston College Preview

The Sports Mix:
Ohio State Buckeyes - BTN and TW Reach a Deal

Ohio Politics:
Ad Watch: Flashback to 2006, Stevens and Palin

All Da King's Men:
McCain Selects Sarah Palin For Vice President

Blog of Mass Destruction:
McCain's Faulty Judgment On Display With Palin Pick

HRLite House:
Friday HR Fun Thought - Couch-surfing

Akrocentric:
"Sunflower," a poem by Frank Steele

Akron Gamer:
A look at Madden NFL 09, pt. 2: Gameplay

BokBluster:
Barackopolis

Ohio Travels with Betty:
Connie asks about hotels and resorts near the lake.

Sound Check:
LeRoi Moore, Dave Matthews Band saxophonist dies

Tia's Trends:
Light at the end of the Tunnel?

Fed officials leave key interest rate unchanged

Inflation, growth fears behind decision. Experts predict hikes next year

By Jeannine Aversa
Associated Press

WASHINGTON: Confronted by rising unemployment, shaky growth, credit troubles and creeping inflation, the Federal Reserve left an important interest rate unchanged Tuesday, taking a gamble that for now the best move was no move at all.

The next direction for rates probably is up but that's not likely until next year.

Chairman Ben Bernanke and all but one of his central bank colleagues agreed to leave its key rate alone at 2 percent for the second consecutive meeting.

In turn, the prime lending rate for millions of consumers and businesses remained at 5 percent. The prime rate applies to certain credit cards, home equity lines of credit and other loans.

''Although downside risks to growth remain, the upside risks to inflation are also of significant concern,'' the Fed said. Policymakers are faced with dueling problems: weak economic growth and advancing inflation. Treating one risks aggravating the other. The Fed indicated Tuesday that each problem poses about equal risks.

It was welcome news to Wall Street, however, where stocks put in their best showing in months on relief that the Fed's assessment of the economy and inflation wasn't worse. The Dow Jones industrials closed up 331.62 points at 11,615.77, its biggest one-day point gain since April 1, when it kicked off the second quarter with a nearly 400-point rally.

Many economists believe the Fed will leave rates where they are at its next meeting on Sept. 16 and through the rest of this year. This would give the fragile economy and crippled housing market more time to heal.

The Fed might start boosting rates, now at four-year lows, early next year, economists predict. Some Wall Street investors, though, haven't ruled out a rate increase later this year to fend off inflation. Either way, most agree the Fed's next move will be up. Keeping rates at low levels for too long could worsen inflation. The economy grew at a subpar 1.9 percent pace this spring — even with the federal tax rebate checks. It shrank late last year.

''The inflation fight probably will have to wait until 2009,'' said Lynn Reaser, chief economist at Bank of America's Investment Strategies Group.

WASHINGTON: Confronted by rising unemployment, shaky growth, credit troubles and creeping inflation, the Federal Reserve left an important interest rate unchanged Tuesday, taking a gamble that for now the best move was no move at all.

The next direction for rates probably is up but that's not likely until next year.

Chairman Ben Bernanke and all but one of his central bank colleagues agreed to leave its key rate alone at 2 percent for the second consecutive meeting.

In turn, the prime lending rate for millions of consumers and businesses remained at 5 percent. The prime rate applies to certain credit cards, home equity lines of credit and other loans.

''Although downside risks to growth remain, the upside risks to inflation are also of significant concern,'' the Fed said. Policymakers are faced with dueling problems: weak economic growth and advancing inflation. Treating one risks aggravating the other. The Fed indicated Tuesday that each problem poses about equal risks.

It was welcome news to Wall Street, however, where stocks put in their best showing in months on relief that the Fed's assessment of the economy and inflation wasn't worse. The Dow Jones industrials closed up 331.62 points at 11,615.77, its biggest one-day point gain since April 1, when it kicked off the second quarter with a nearly 400-point rally.

Many economists believe the Fed will leave rates where they are at its next meeting on Sept. 16 and through the rest of this year. This would give the fragile economy and crippled housing market more time to heal.

The Fed might start boosting rates, now at four-year lows, early next year, economists predict. Some Wall Street investors, though, haven't ruled out a rate increase later this year to fend off inflation. Either way, most agree the Fed's next move will be up. Keeping rates at low levels for too long could worsen inflation. The economy grew at a subpar 1.9 percent pace this spring — even with the federal tax rebate checks. It shrank late last year.

''The inflation fight probably will have to wait until 2009,'' said Lynn Reaser, chief economist at Bank of America's Investment Strategies Group.



Story tools

Email  Email   Print  Print   Save  Save   Reprint  Reprint   Popular  Most Popular   Reprint  Subscribe

Share this story

AddThis Social Bookmark Button


Specialist Thomas Facchine, left, directs trading at his post on the floor of the New York Stock Exchange on Tuesday. Wall Street shot higher Tuesday as investors got some heartening economic news: a report that activity in the services sector fell less than expected last month, and another drop in the price of oil. (Richard Drew/Associated Press)