Washington - The US Federal Reserve kept interest rates unchanged on Tuesday, citing both growth and inflation risks to the US economy amid an ongoing financial crisis in the country. In a unanimous decision, the US central bank's federal funds rate was left at 2 per cent, despite some expectation that the week's financial turmoil might lead to a cut in the benchmark rate.
Wall Street stocks on Monday posted their worst losses since the September 2001 terrorist attacks, but had recovered slightly Tuesday afternoon.
The Federal Open Market Committee acknowledged that "strains in financial markets have increased significantly," and cited credit conditions and the ongoing housing crisis as continuing drags on the economy.
But the Fed also warned that inflation remained of "significant concern."
The government earlier Tuesday reported consumer prices dropped 0.1 per cent from July to August on a seasonally adjusted basis, the first monthly drop in two years.
