The Federal Reserve Board today left short-term interest rates unchanged at 1.75%, saying in a statement that there was still the risk of economic weakness. The Fed cut rates 11 times last year.
"They did the right thing, especially in light of all the (economic) data coming out. Its right for them to take a pause, said Victor Thompson, senior principal and head of fixed income at State Street Global Advisors. "It may be a long pause; we could go as long as a year without seeing any changes in interest rates by the Fed. Mr. Thompson said the small uptick of 0.2% in GDP for the fourth quarter, announced this morning, and the decline in unemployment insurance claims indicates that the recession has bottomed out.
William Quinn, president of AMR Investment Services, Fort Worth, Texas, which oversees the $11 billion American Airlines pension fund, said what the Fed did today "was the prudent thing to do. Theyve lowered rates so dramatically, and the economy seems to have bottomed out. To take a wait-and-see attitude now is good.