Fed holds US rates steady, warns of too low inflation

WASHINGTON: Federal Reserve policymakers have decided at their latest meeting to keep US interest rates steady at 1961 lows, but warned of a possible “unwelcome substantial fall in inflation”, saying this meant the economy was in danger of weakness ahead. 

In a brief but complex post-meeting statement on Tuesday, the Fed made clear that it still hoped a lagging recovery would gain steam now that Iraqi hostilities had ended, but opened the door to future cuts in borrowing cost by saying it was not clear when a robust recovery would come.