WASHINGTON (Reuters) - The Federal Reserve held U.S. interest rates steady on Tuesday and showed little inclination to lower them soon, spurning calls for cuts from financial markets roiled by the bankruptcy of investment bank Lehman Brothers Holdings Inc (NYSE:LEH - News).The central bank's unanimous decision left benchmark overnight rates at 2 percent, a level reached in April.
"Downside risks to growth and the upside risks to inflation are both of significant concern," the Fed said, surprising many analysts who thought recent market shocks would help policy-makers set aside earlier concerns on price pressures.
"To read their statement, you would never know the sky has fallen in on Wall Street," said Ian Shepherdson, chief U.S. economist at High Frequency Economics. "This statement is either very brave or very reckless. Not to acknowledge the catastrophes ... runs the very serious risk that the Fed will be seen as Nero, fiddling while Wall Street burns."
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