Fed Not Likely To Raise Rates Soon

Washington, DC, Nov. 5, 2009--Federal Reserve officials gave no indication that it will raise interest rates anytime soon, saying an increase will depend on when the labor market and inflation pick up.

The Fed’s Open Market Committee yesterday restated its pledge to keep rates “exceptionally low” for an “extended period.” The panel added for the first time that its commitment depends on “low rates of resource utilization, subdued inflation trends and stable inflation expectations.”

The comments prompted traders to reduce bets for an increase in borrowing costs in the first half of 2010, given that policy makers are focused on reducing unemployment that’s forecast to rise above 10 percent.

Policy makers left their target for the overnight interbank lending rate unchanged at a range of zero to 0.25 percent. The vote was unanimous.

The biggest change was adding the 13 words that clarified the “extended period” pledge on interest rates, economists said.