The Federal Reserve decided Tuesday (March 18) to leave interest rates unchanged at least until it sees the economic impact of the pending war in Iraq.
As a result, the prime rate, to which many RV dealer’s inventory finance loans are pegged, remains at 4.25%, its lowest level since 1958.
The Fed’s next regularly scheduled meeting will be on May 6 but it did meet in emergency session twice during 2001 to lower rates in an effort to stop the economy’s slide into recession.
In its statement issued Tuesday, the Fed said it believes recent economic data is “mixed” and labor market data is “disappointing.” But it also believes the sluggish economy is largely the result of high oil prices “and other aspects of geopolitical uncertainties.”
Once those uncertainties lift, the Fed believes the current low-interest rate environment, combined with “ongoing growth in productivity,” should spark faster economic growth.
“In light of the unusually large uncertainties clouding the geopolitical situation in the short run and their apparent effects on economic decisionmaking,” the Fed “decided to refrain from making (a) determination until some of those uncertainties abate.”