Fed keeps US interest rates unchanged

The US Federal Reserve held interest rates at 45-year lows today as policy-makers renewed a vow to keep borrowing costs down …

The US Federal Reserve held interest rates at 45-year lows today as policy-makers renewed a vow to keep borrowing costs down for a long time while still saying the threat of falling prices had eased.

The rate-setting Federal Open Market Committee said the chance of an unwelcome drop in inflation was now almost equal to the possibility price pressures could pick up.

Policy-makers voted unanimously to hold the federal funds rate charged on overnight loans between banks at 1 percent, the lowest since 1958.

"The probability of an unwelcome fall in inflation has diminished in recent months and now appears almost equal to that of a rise in inflation," the Fed said in a post-meeting statement.

"However, with inflation quite low and resource use slack, the committee believes that policy accommodation can be maintained for a considerable period," it added.

The beleaguered US dollar got a mild lift from the news while Treasury bond prices rose.

Most recent indicators show the US economy gaining steam after enduring a mild recession in 2001, but at a ragged pace that is not yet generating a healthy rise in hiring.

The government said last week the unemployment rate fell to an eight-month low of 5.9 per cent in November but there are still 2.4 million fewer jobs in the United States than before the recession.

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