Greenspan didn't raise rates. But market down sharply.
Wednesday November 12 2:57 PM EST
Federal Reserve Leaves U.S. Rates Unchanged
By Knut Engelmann
WASHINGTON (Reuters) - The Federal Reserve left key interest rates unchanged Wednesday in a widely
expected move following weeks of global financial market turmoil.
"The Federal Open Market Committee meeting ended at 1:10 p.m. EST," Fed spokesman Joseph Coyne said.
"There is no further announcement."
The U.S. central bank's decision left the federal funds overnight rate, which sets the standard for other interest
rates throughout the economy, at 5.5 percent. The discount rate, at which the Fed loans money to banks on an
emergency basis, remains at 5 percent.
After the Fed announcement, U.S. stocks extended losses triggered by overnight selling in Asian markets. At
2:30 p.m. EST, the Dow Jones industrial average was down 84 points at 7,474.
U.S. bond prices shed earlier losses to post a slight rise on the day. The dollar softened against the German
mark but was little changed on the Japanese yen.
"With the Fed on hold right now, we're seeing the dollar shed some of its gains right now, but that may just be a
knee-jerk reaction," Stephen Flanagan, chief currency dealer at Erste Bank N.Y., told Reuters Financial
Television.
Concern over the fallout from financial turmoil that swept through Asia and triggered wild swings in global
markets was forecast to keep Fed policy makers from raising borrowing costs despite signs of heightened wage
pressures in the U.S. economy that risk rekindling inflation.
"It would have been a major shock to the financial markets if they had moved today given the recent events in
Asia and in financial markets," said Lynn Reaser, chief economist at Barnett Banks Inc. in Jacksonville, Fla.
The Fed last changed rates on March 25 when it raised the fed funds rate by a quarter percentage point, its first
increase in two years. The FOMC next meets on Dec. 16, but most analysts expect it to keep rates on hold
until early next year. |
