The Federal Reserve decided to keep short-term interest rates unchanged yesterday, in something of an anticlimax to recent dramatic developments on the US policy front. But it appeared to leave open the possibility of future rate cuts if the economy failed to emerge from its current "soft spot".
The Fed's policymaking Open Market Committee (FOMC) voted unanimously at its last scheduled meeting of the year to leave the Fed funds rate at a 40-year low of 1.25 per cent. The rate regulates overnight lending of reserves among banks.
Surprising signs of economic weakness have emerged over the past two weeks, raising doubts among investors about the strength of the recovery. But those signs failed to sway the Fed from its position that it had done enough for now.
