- The Washington Times - Tuesday, September 16, 2008

WASHINGTON, Sept 16, 2008 (AFP) - The Federal Reserve on Tuesday held unchanged its base lending rate at 2.0 percent, and said the economy faces risks on both growth and inflation.

The move, decided in a unanimous vote by the Federal Open Market Committee defied expectations of traders in the futures market of a quarter-point in the face of financial market turmoil.

Hours ahead of the announcement, the futures market had been pricing in a 92 percent chance of a quarter-point cut in the federal funds rate.

The FOMC statement noted that “strains in financial markets have increased significantly and labor markets have weakened further” since the last meeting in August but added that “the downside risks to growth and the upside risks to inflation are both of significant concern.”

“The committee will monitor economic and financial developments carefully and will act as needed to promote sustainable economic growth and price stability,” the FOMC said.

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