Fed leaves rate unchanged despite market strains

by Tina Kells | September 16, 2008 at 10:29 am

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Despite earlier predictions that rates would be cut, the U.S. Federal Reserve has announced that its key interest rate will remain unchanged.

The central bank said Tuesday it was keeping its target for the federal funds rate, the interest that banks charge on overnight loans, unchanged at 2 percent.

In a statement, the Fed said "strains in financial markets have increased significantly and labor markets have weakened further."

How the already struggling financial markets will react to this news remains to be seen.

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