Federal Reserve leaves key interest rate unchanged

Federal Reserve leaves key interest rate unchanged
The Federal Reserve today voted to maintain the current target range for the federal funds rate at 0 percent to 0.25 percent, anticipating that economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period.

"The economy has continued to contract, though the pace of contraction appears to be somewhat slower," the Fed said in a prepared statement. "Household spending has shown signs of stabilizing but remains constrained by ongoing job losses, lower housing wealth, and tight credit. Weak sales prospects and difficulties in obtaining credit have led businesses to cut back on inventories, fixed investment, and staffing. Although the economic outlook has improved modestly since the March meeting, partly reflecting some easing of financial market conditions, economic activity is likely to remain weak for a time," and inflation will remain subdued.

As previously announced, the Fed will continue to provide support to mortgage lending and housing markets and to improve overall conditions in private credit markets, and will purchase a total of up to $1.25 trillion of agency mortgage-backed securities and up to $200 billion of agency debt by the end of the year. In addition, the Federal Reserve will buy up to $300 billion of Treasury securities by autumn.