Fed Leaves Interest Rates Unchanged
By Seth Harbison
Continued good news for holders of variable-rate credit cards, as the Federal Reserve Board’s Open Market Committee voted yesterday to hold the line on interest rates. This was the fourth straight meeting of the Committee in which rates were left unchanged. (It was also the fourth meeting in a row in which Committee member Jeffrey M. Lacker differed with his colleagues; Lacker preferred another quarter-point hike.)
While the Committee’s statement left open the option of increases in the future, the overall tone seemed to suggest that the economy is progressing slowly and steadily, just as Federal Reserve Chairman Ben Bernanke would prefer. In fact, the Committee’s statement says the “economy seems likely to expand at a moderate pace on balance over coming quarters.”
Most credit cards charge interest on a variable-rate basis, meaning that a card’s interest rate rises and falls based on benchmark rates such as the Prime Rate, which itself rises and falls with the federal funds rate that the Open Market Committee sets. So, when rates are steady, consumers who aren’t paying attention to the Federal Reserve don’t get a nasty surprise in their credit card statements.
