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US Federal Reserve Expected to Hold Interest Rate Steady


The U.S. central bank is expected to hold the key interest rate steady at two percent at the end of a meeting on inflation and other economic issues Wednesday in Washington.

The Federal Reserve's benchmark rate influences interest rates for all kinds of loans, from mortgages for individual homeowners to financing for large companies.

The Fed has been cutting interest rates since September in an effort to boost the U.S. economy, which has been hurt by falling home prices, plunging consumer confidence, tight credit, and soaring energy prices.

But interest rates that are too low could boost inflation, and Fed Chairman Ben Bernanke has been warning that the risk of inflation is growing. Central banks fight inflation by raising interest rates, but most economists expect the Fed to balance the need to boost the economy with the need to fend off inflation, and keep rates where they are for the time being.



Some information for this report was provided by AFP, AP, Bloomberg and Reuters.


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