June 24, 2008
WASHINGTON (AP) -- The Federal Reserve today begins a two-day policy-setting session but it's not expected to touch interest rates.
The central bank is caught in a bind between concern about a sluggish economy and rising prices.
As result, the Fed is expected to hold its benchmark rate steady at two percent when the announcement comes tomorrow. That means the prime rate for millions of consumers and businesses would stay at five percent. It applies to certain credit cards, home equity lines of credit and other loans.
Some observers think inflation might force the Fed to start boosting rates later this year, possibly in August. However, many others think that's a situation the Fed would like to avoid, especially given that the housing market is still flailing and foreclosures are at record highs.
(Copyright 2008 Associated Press. All rights reserved.)