Fed Holds Line on Interest Rates; Markets Bounce

Committee leaves rate at 2%, confounding investors' expectations

By Marie Morris, Newser Staff

Posted Sep 16, 2008 1:38 PM CDT

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Fed Holds Line on Interest Rates; Markets Bounce — A Wall St. street sign is seen near the New York Stock Exchange Monday, Sept. 15, 2008 in New York. A stunning reshaping of the Wall Street landscape sent stocks down sharply Monday, but the pullback appeared relatively orderly _ perhaps because investors were unsurprised by the demise of Lehman Brothers... (AP Photo/Jin Lee)

In its first unanimous interest rate decision in a year, the Federal Reserve voted today to leave its key interest rate unchanged at 2%. The decision reflects regulators' unwillingness to get even more involved in the developments roiling the financial markets, the Wall Street Journal reports. Stocks fell triple-digits on the news that an anticipated cut wouldn't materialize, but bounced back up in late afternoon trading.

The Federal Open Market Committee appeared to leave the door open to further intervention, saying it "will monitor economic and financial developments carefully and will act as needed to promote sustainable economic growth and price stability." The panel's focus now appears to be warding off inflation. "I don't think we have a generally weak economy that needs lower rates," a former Fed official told Bloomberg.
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