NewsFlashFed leaves US interest rates flat

07 August 2007 19:47  [Source: ICIS news]

HOUSTON (ICIS news)--The US Federal Reserve on Tuesday left interest rates steady, despite the credit-crunch jitters in US financial markets that are already impacting chemical companies' plans.

As most economists expected, the Fed left its main lending rate at 5.25%. It has been unchanged since 29 June 2006.

Some analysts had called for the Fed to lower interest rates, citing concerns that the deep problems in the nation's home mortgage market could spread.

Financial markets have been volatile in recent weeks, and credit conditions have become tighter for some households and businesses, the Fed said. In addition, the housing market continues to be languish.

However, the US economy has maintained moderate growth in the first half of the year, despite the ongoing problems in the housing sector, the Federal Reserve said in a statement.

The Fed expects that the US economy will continue to expand at a moderate pace for the upcoming months.

The central bank said it was still concerned about inflation, despite improvements in recent months.

Inflationary pressures have yet to show any convincing signs of sustained moderation, it said.

The tightening of credit availability may drive up the borrowing costs of some riskier chemical projects, according to analysts.

International Flavors & Fragrances, a US-based fine chemical firm, said on Tuesday it may have to amend its stock buyback program because of the credit situation.

By: Al Greenwood
+1 713 525 2653

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