Interest Rates Stay Put

June 26, 2002 ( - Members of the Federal Open Market Committee (FOMC) voted unanimously to keep the federal funds rate unchanged at 1.75%, despite increases in economic activity.

Commenting on the decision to keep rates at a four-decade low, the FOMC pointed to the leveling of the upswing in inventory investment. In addition, growth in final demand appears to have moderated.

The FOMC said in a press release that it expects “the rate of increase of final demand to pick up over coming quarters, supported in part by robust underlying growth in productivity, but the degree of the strengthening remains uncertain.”
The statement said risks were equally balanced between economic weakness and a flare-up in inflation, a stance unchanged from the last meeting on May 7, but economists said its overall downbeat tone indicated no rate increases were likely in the imminent future.

US interest rates have remained at this level since December 2001.