US
Fed puts interest rate rise on hold
The Federal Reserve has finally put a hold on interest
rate increases after continuously raising interest rates
for two years in a row. The Fed has sent out signals that
the US economy is slowing down and interest rate hikes
can be halted in its fight against inflation.
The
decision came after economic data showed that the US economy
is slowing more sharply than predicted. Wall Street and
companies have now begun worrying that the Fed may have
tightened monetary policy too far. The Fed said economic
growth had moderated because of a cooling housing market,
high energy prices and the cumulative effects of its long
series of rate rises since June 2004.
However,
inflation remains stubbornly high mainly due to a jump
in oil prices, which has pushed up petrol prices and caused
consumers to curb spending. Last month's GDP figures for
the second quarter of the year showed the US economy growing
at 2.5 per cent which was much weaker than expected and
a sharp drop from the pace of GDP growth in the early
part of the year, which was 5.6 per cent.
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