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As was widely anticipated, the Federal Reserve decided today (Sept. 24) to leave interest rates unchanged.
No action by the Fed. means the benchmark prime rate will remain at 4.75%, its lowest level since 1972.
The Fed. decided to leave rates unchanged because it believes overall consumer demand for goods and services “is growing at a moderate pace,” which, along with the “still robust underlying growth in productivity, should be sufficient to foster an improving business climate.”
However, the Fed. also noted that there is considerable uncertainty about “the extent and timing of the expected pickup in production and employment,” partly because of “heightened geopolitical risks,” including the possibility of the U.S. going to war against Iraq.
Fed. Chairman Alan Greenspan and nine of the members of the Fed.’s Open Market Committee voted to leave rates unchanged.
Two committee members, Edward Gamlich and Robert McTeer Jr., voted to lower interest rates.
Many economists and market observers believe an interest rate cut is more likely during the next regularly scheduled Fed. meeting on Nov. 6. Those observers believe the Fed. wants to see if the economy gets worse during the next six weeks. If it does, they speculate the Fed would want to give it a boost with a rate decrease.
Lower interest rates have sparked RV dealer profits this year because carrying costs on their inventory is one of RV dealers’ biggest expenses.