WASHINGTON: US Federal Reserve policy-makers have held interest rates at 1961 lows, contending that uncertainties caused by the pending war in Iraq are so extreme they could not gauge the American economy’s prospects.
In a new and unusual turn of phrase that left markets puzzled, the Fed policy-makers also pledged “heightened surveillance”, implying they were ready to lower rates if necessary. They next meet on May 6 but could act earlier if the war goes badly for the United States or the economy unravels.