Fed Policymakers Leave Interest Rates Unchanged

Federal Reserve Board rate-policy officials on Tuesday decided to leave interest rates alone, as recent data have depicted healthy but not excessive economic growth and little inflation.

The central bank’s Federal Open Market Committee ended a three-hour, 45-minute closed-door meeting without changing the benchmark rate on overnight loans between banks. That rate has been at 5.5% since March, when the Fed bumped it up by a quarter percentage in a bid to dampen inflationary pressures.

An increase Tuesday would have raised borrowing costs for millions of U.S. consumers and businesses.

“Inflation is a nonevent,” said Anthony Chan, chief economist at Banc One Investment Advisors Corp. in Columbus, Ohio. Fed Chairman Alan Greenspan has said in speeches and congressional testimony this year that the central bank’s enemy is inflation, not growth. Given that, Greenspan has shown a willingness to experiment to see how fast the economy can expand beyond the Fed’s oft-stated noninflationary target of 2.5% annual growth. During the first six months of the year, the economy expanded at a 4.1% annual rate.

The Conference Board reported that consumer confidence in the economy improved in September from August, but the Commerce Department reported that sales of new homes declined in August. A regional report suggested that manufacturing activity cooled in the Chicago region in September.