Fed Keeps Rate at 2% as Inflation Accelerates, Growth Stagnates

The Federal Reserve kept its benchmark interest rate at 2 percent for the second consecutive meeting as inflation accelerates and the economic slowdown shows signs of deepening.

``Although downside risks to growth remain, the upside risks to inflation are also of significant concern to the committee,'' the Federal Open Market Committee said in a statement today in Washington.

Chairman Ben S. Bernanke is constrained by threats to both sides of his mandate to achieve stable prices and full employment. A rate cut risks pushing inflation higher still; an increase would further tighten credit, undermine troubled banks and starve the faltering economy of investment and spending.

``Labor markets have softened further and financial markets remain under considerable stress,'' the Fed's statement said. ``Tight credit conditions, the ongoing housing contraction, and elevated energy prices are likely to weigh on economic growth over the next few quarters.''
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Full article at link by Craig Torres// Bloomberg.com: Worldwide

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