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Fed Holds Interest Rate Steady at Record Low Level

  • Jim Randle

U.S. central bank officials have decided to keep interest rates unchanged at the record low rate where they have been for several years.

Federal Reserve Chair Janet Yellen says officials want more improvements in the labor market and need to see inflation rise to the 2 percent annual rate they think is best for the economy.

Yellen spoke to journalists in Washington Thursday at the end of two days of debate among top Fed officials about where to set rates.

This would have been the first rate increase in nearly a decade, and many officials say the Federal Reserve may raise rates a bit later this year.

The central bank changes interest rates in an effort to steer the economy toward stable prices and full employment.

The Fed cut the rates to a record low range between zero and a quarter of a percent during the financial crisis in a bid to support economic growth. Economists say higher rates would tend to slow growth and make it less likely that inflation will rise sharply and harm the economy.

Since then, unemployment has improved, falling from 10 percent to just over 5 percent. Inflation, however, has stayed below the 2 percent annual rate that Fed officials think works best for the economy.

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