WASHINGTON (Aug. 10, 2010) — The Federal Reserve's Federal Open Market Committee (FOMC), faced with evidence that the economic recovery is slowing down, will keep a key interest rate at 0 to ¼ percent and take modest steps to reduce the national debt, the FOMC announced today.
The committee voted to keep the federal funds rate—the interest rate at which banks lend money to each other—at near zero.
“To help support the economic recovery in a context of price stability, the committee will keep constant the Federal Reserve's holdings of securities at their current level by reinvesting principal payments from agency debt and agency mortgage-backed securities in longer-term Treasury securities,” the FOMC said in a press release.
Some economic signs are encouraging, such as recent increases in business and household spending, the committee said. But other indicators remain weak, such as unemployment, income growth, housing wealth, housing starts and credit availability, it said.