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| Fed keeps rates on hold at 5.25% | |
| (about 3 hours later) | |
| The US Federal Reserve has kept its main interest rate on hold at 5.25%, in a move widely expected by analysts. | |
| The Fed's Open Market Committee decided to leave its main rate unchanged, amid ongoing concerns over economic growth and a weak US housing market. | |
| The rate-setting body last increased the cost of borrowing in June 2006, bringing to an end two years of rises. | The rate-setting body last increased the cost of borrowing in June 2006, bringing to an end two years of rises. |
| But recent comments from the Fed have signalled it may be willing to consider a cut in rates later this year. | But recent comments from the Fed have signalled it may be willing to consider a cut in rates later this year. |
| In a statement following its rate decision in March, the Fed suggested that inflation fears had subsided slightly, raising the prospect of a possible future cut in rates, analysts said. | In a statement following its rate decision in March, the Fed suggested that inflation fears had subsided slightly, raising the prospect of a possible future cut in rates, analysts said. |
| Sub-prime worries | Sub-prime worries |
| The latest decision by the Federal Reserve comes a day before key interest rate decisions by the Bank of England and the European Central Bank. | |
| UK interest rates are widely expected to rise by a quarter of a percentage point to 5.5%, because of concerns about inflation. | UK interest rates are widely expected to rise by a quarter of a percentage point to 5.5%, because of concerns about inflation. |
| The Fed's decision comes amid rising concerns about the US housing sector, in particular the sub-prime mortgage market. | |
| Sub-prime lenders provide mortgages to people with poor credit histories, and previous steady increases in US interest rates have pushed defaults to near-record levels. | Sub-prime lenders provide mortgages to people with poor credit histories, and previous steady increases in US interest rates have pushed defaults to near-record levels. |
| At the same time, analysts have been questioning whether some of the industry's biggest sub-prime lenders will be able to survive amid the rising tide of defaults. | At the same time, analysts have been questioning whether some of the industry's biggest sub-prime lenders will be able to survive amid the rising tide of defaults. |