Fed Moves to Neutral Bias

March 19, 2002 (PLANSPONSOR.com) - As expected, the Federal Open Market Committee left short-term interest rates unchanged amid signs that the US economy is slowly struggling out of its slowdown.

The key fed funds rate, which determines all other US interest rates, will remain at its current 40-year low of 1.75%, although, the bias has been changed to neutral from an easing bias, setting the stage for future rate increases.

The announcement follows comments by Federal Reserve Chairman Alan Greenspan earlier in the month that an economic expansion is “well under way.”

This marks an end to the aggressive easing campaign, which saw the Fed cut rates eleven times last year in efforts to bolster the lackluster economy.