Fed Votes to Hold Interest Rates Near Zero

BY Jason M. Breslow  January 27, 2010 at 5:11 PM EDT

The Federal Reserve, as expected, announced Wednesday it will keep interest rates near zero “for an extended period” to help support an uneven economic recovery.

Sounding a somewhat upbeat tone, the Fed said “that economic recovery has continued to strengthen and that the deterioration in the labor market is abating.”

In a rare dissent, though, one member of the central bank’s policy making committee voted against the target federal funds rate. According to the Fed, Thomas M. Hoenig, president of the Federal Reserve Bank of Kansas City, “believed that economic and financial conditions had changed sufficiently that the expectation of exceptionally low levels of the federal funds rate for an extended period was no longer warranted.”

Tonight on the NewsHour, Paul Solman explores the fine line the Fed must walk in managing interest rates.