US holds interest rates at 2 per cent

  • Story by: Gemma Westacott
  • Magazine: FTAdviser
  • Published Thursday , June 26, 2008

The US Federal Reserve has opted to hold interest rates steady at 2 per cent in a bid to combat rising inflation.

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The decision, announced late yesterday (25 June), follows a series of rate cuts as the Fed has sought to shore up the flailing US economy. Since last Autumn US interest rates have been slashed from 5.25 per cent to 2 per cent.

However, yesterday's decision to keep the US rate steady came as little surprise, as economists had earlier warned that another cut could have stoked inflation pressures.

In a statement, the Fed said: "Although downside risks to growth remain, they appear to have diminished somewhat, and the upside risks to inflation and inflation expectations have increased."

The statement also took note of "continued increases in the prices of energy and some other commodities."

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