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US interest rates left unchanged | |
(about 1 hour later) | |
The US Federal Reserve has kept its key interest rate unchanged at 2% as it grapples with the twin dangers of possible recession and high inflation. | |
Policymakers are having to support a slowing economy, while also ensuring inflationary pressures, driven by high oil prices, do not get out of control. | Policymakers are having to support a slowing economy, while also ensuring inflationary pressures, driven by high oil prices, do not get out of control. |
Consumer prices rose at their fastest monthly rate in 11 years during June, although oil prices are now falling. | Consumer prices rose at their fastest monthly rate in 11 years during June, although oil prices are now falling. |
The Fed cut rates aggressively in late 2007, but have frozen them since April. | The Fed cut rates aggressively in late 2007, but have frozen them since April. |
Economic uncertainty | Economic uncertainty |
Experts say uncertainty over how severe and prolonged the economic slowdown will be is making the Fed cautious about any shift in policy. | Experts say uncertainty over how severe and prolonged the economic slowdown will be is making the Fed cautious about any shift in policy. |
The continued slump in the housing market and its impact on consumer confidence has made any imminent rate rise unlikely despite signs of increasing inflationary pressures. | The continued slump in the housing market and its impact on consumer confidence has made any imminent rate rise unlikely despite signs of increasing inflationary pressures. |
Data published on Tuesday showed that the services sector contracted again in June but not by as much as experts had forecast. | Data published on Tuesday showed that the services sector contracted again in June but not by as much as experts had forecast. |
Second-quarter gross domestic product (GDP) growth was a stronger-than-expected 1.9%, on an annual basis, although this was aided by government stimulus measures. | Second-quarter gross domestic product (GDP) growth was a stronger-than-expected 1.9%, on an annual basis, although this was aided by government stimulus measures. |
Unemployment, meanwhile, has risen to a four-year high while consumer spending is weak, rising only 0.2% in June. | Unemployment, meanwhile, has risen to a four-year high while consumer spending is weak, rising only 0.2% in June. |