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US Central Bank Leaves Interest Rates Unchanged - 2003-09-16


The Federal Reserve, the U.S. central bank, Tuesday left short-term interest rates unchanged at their lowest level since 1958. The Fed says it remains concerned about a weak labor market.

Federal Reserve policy makers voted 12-0 to keep short-term interest rates at one percent. In a statement, the Fed said spending is firming although the labor market has been weakening. Low interest rates are intended to stimulate economic activity by keeping the cost of borrowing low.

Since the recession or economic downturn ended nearly two years ago, the now moderately growing U.S. economy has continued to lose jobs. Last month 93,000 jobs were lost, the seventh straight monthly decline. Since the recession ended in November 2001, 1.3 million jobs have been lost.

Most economists say the pace of economic growth has accelerated to around four percent, a pickup from a three percent rate for the April to June quarter. Companies have not needed to add workers despite the quickening growth because of productivity gains, increases in output per worker.

Experts anticipate interest rates will remain low in the months ahead. Inflation is low and the central bank sees no danger of the economy overheating where rapid growth puts upward pressure on prices. On the contrary, Tuesday's Fed statement said there is a risk of inflation becoming undesirably low. Japan and Hong Kong have been experiencing several years of deflation or outright price declines.

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