The Federal Reserve today kept the federal funds rate unchanged at 1.75%, remaining at 40-year lows. The market expected the announcement, which keeps in balance the risks of economic weakness and inflation, said James C. Jackson, executive director and co-head of investment-grade bonds at UBS Global Asset Management.
Lynn Reaser, CEO of Banc of America Capital Management, said, "The bond market is probably at its high in terms of price, with the Fed unlikely to cut rates further. She expects the stock market to respond to better economic performance, aside from short-term problems related to accounting problems. She also expects economic growth to accelerate in the second half of the year and into 2003.