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U.S. Fed stands pat
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The Associated Press
The U.S. Federal Reserve announced no changes in monetary policy Tuesday, and warned of "significant downside risks" to the economic outlook because of strains in the financial markets.
The Fed's monetary policy committee, in its final interest rate announcement of the year, said the U.S. economy was experiencing "moderate" growth, which seemed to be a slightly more optimistic view compared with its last statement, when it referred to a somewhat stronger performance in summer.
It disappointed economists who had said it might start signaling the direction of short-term rates starting next year.
Doing so would help assure investors, companies and consumers that rates won't rise before a specific time.
Still, it could introduce a new communications strategy to increase clarity about its plans for short-term rates as soon as the next scheduled rate announcement on Jan. 24.
The Fed has kept its key rate, the federal funds rate, at a record low of between zero and 0.25 per cent for three years.
It repeated its plan, first announced in August, to keep its benchmark rate at a record low until at least mid-2013.
The U.S. economy, while improving, is still weak.
Unemployment remains high at 8.6 per cent.
As most private economists expected, the Fed said nothing about any further support to the economy, such as additional bond purchases.
It has already bought more than $2 trillion US in government bonds and mortgage-backed securities to try to cut long-term rates and lower borrowing costs.
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