Fed Maintains Course, Sees Weak Economic Activity

Washington, DC, June 25, 2009--The Federal Reserve, offering a modestly more optimistic assessment of the economy on Wednesday, reaffirmed its policy of keeping interest rates at near zero and suggested it could continue to spur economic activity without triggering inflation.

The central bank, ending two days of scheduled meetings, said that while the recession was easing, "economic activity is likely to remain weak for a time." Household spending, the Fed said, "remains constrained by ongoing job losses, lower housing wealth and tight credit."

As expected, the Fed issued a statement reiterating its pledge to keep the key federal funds rate, the rate that banks charge one another for overnight loans, at between zero and 0.25% for "an extended period." That rate, in place since December, is aimed at lowering interest rates across the board.

The Fed's posture -- broadly expected by analysts -- was essentially unchanged from its last policy-setting session in late April.

In its statement, the Fed did take note of recent increases in the prices of energy and commodities, but the central bank restated its belief that inflation "will remain subdued for some time."