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Fed Leaves Interest Rates Unchanged - 2002-01-30


Amidst signs that the U.S. economy might be moving out of recession, the Federal Reserve Board Wednesday announced it will leave the federal funds rate - the interest that banks charge each other for overnight loans - unchanged, at 1.75 percent. The United States central bank is holding rates steady after lowering interest rates 11 times last year to spur economic growth.

"With the forces restraining the economy starting to diminish," the Federal Reserve said in a statement explaining its decision, "the outlook for economic recovery has become more promising."

The Federal Reserve's announcement followed several positive economic indicators. The Commerce Department reported earlier Wednesday that the American economy had managed to grow by 0.2 percentage points during the last quarter of 2001.

Statistics released Tuesday showed an increase in factory orders and a rise in consumer confidence.

Many economists predict last year's 11 interest rate cuts have paved the way for a return to healthy economic growth, in the second half of 2002. But the Federal Reserve stressed it is leaving the door open to further rate reductions if necessary.

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