US Federal Reserve policymakers voted unanimously this evening to keep key short term rates unchanged at a 40-year low, but indicated their readiness to cut if necessary.
Weak financial markets and uncertainty triggered by a slew of corporate accounting scandals had prolonged a softening in demand that emerged earlier this year, the Federal Open Market Committee said.
"The current accommodative stance of monetary policy, coupled with still-robust underlying growth in productivity, should be sufficient to foster an improving business climate over time," it said in a statement.
But the committee changed its stance on the outlook for inflation and economic growth, saying: "The risks are weighted mainly toward conditions that may generate economic weakness."
That statement was a broad signal to the market that the Federal Reserve stands ready to cut the federal funds target rate -- currently at 1.75 percent -- if warranted.
At its previous meeting on June 26th, the Federal Reserve had said the risks were balanced.
Wall Street weakened in the minutes after the decision was announced.
AFP