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CNN Live At Daybreak

Fed Leaves Interest Rates at 1 Percent

Aired August 13, 2003 - 06:16   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


CAROL COSTELLO, CNN ANCHOR: Time for a little business buzz right now. The Fed says interest rates will hold steady.
For more on the Fed's decision, let's go to Carrie Lee live at the Nasdaq site in New York.

Good morning -- Carrie.

CARRIE LEE, CNN FINANCIAL NEWS CORRESPONDENT: Good morning, Carol.

Yesterday afternoon the Federal Reserve's key interest rate target, which sets the pattern for business and consumer loans, did remain unchanged, as expected, so the key Federal Funds Rate stands at 1 percent. This is a 45-year low. And most importantly here, the Fed says that it could stay low for a considerate period, which means that the cost of borrowing money will remain low.

Now as for the Fed statement that accompanies the rate decision, and this is what a lot of people were waiting for yesterday, policymakers say the risk of falling prices remains bigger than the risk of inflation, which of course means rising prices. They also, though, saw signs of a pick up in the economy and they expect this pick up to continue in the near future.

Now since June's meeting there have been some pretty convincing signs that the economy is starting to improve, businesses have started to spend more money, also consumer spending is up. The big missing piece of the puzzle, however, is hiring. The Fed, investors and consumers all want to see that businesses are adding new workers before they say that this rebound is really getting some legs. So that's sort of what people are waiting for, Carol.

Still, the markets rallied yesterday after the decision at 2:15, the Dow up about 1 percent, the Nasdaq up about 1.5 percent at the close. We'll see what happens today. Back to you.

COSTELLO: The early word on futures.

LEE: Thinks look a little bullish. We could see a bit of a higher open. That's what it is looking like right now, anyway. We'll also get retail sales figures from the government before the opening bell talking about how our nation's retailers are faring, so that could be a determining factor as well.

COSTELLO: Carrie Lee, we'll get back to you later. Carrie Lee live from New York this morning. TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com






Aired August 13, 2003 - 06:16   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CAROL COSTELLO, CNN ANCHOR: Time for a little business buzz right now. The Fed says interest rates will hold steady.
For more on the Fed's decision, let's go to Carrie Lee live at the Nasdaq site in New York.

Good morning -- Carrie.

CARRIE LEE, CNN FINANCIAL NEWS CORRESPONDENT: Good morning, Carol.

Yesterday afternoon the Federal Reserve's key interest rate target, which sets the pattern for business and consumer loans, did remain unchanged, as expected, so the key Federal Funds Rate stands at 1 percent. This is a 45-year low. And most importantly here, the Fed says that it could stay low for a considerate period, which means that the cost of borrowing money will remain low.

Now as for the Fed statement that accompanies the rate decision, and this is what a lot of people were waiting for yesterday, policymakers say the risk of falling prices remains bigger than the risk of inflation, which of course means rising prices. They also, though, saw signs of a pick up in the economy and they expect this pick up to continue in the near future.

Now since June's meeting there have been some pretty convincing signs that the economy is starting to improve, businesses have started to spend more money, also consumer spending is up. The big missing piece of the puzzle, however, is hiring. The Fed, investors and consumers all want to see that businesses are adding new workers before they say that this rebound is really getting some legs. So that's sort of what people are waiting for, Carol.

Still, the markets rallied yesterday after the decision at 2:15, the Dow up about 1 percent, the Nasdaq up about 1.5 percent at the close. We'll see what happens today. Back to you.

COSTELLO: The early word on futures.

LEE: Thinks look a little bullish. We could see a bit of a higher open. That's what it is looking like right now, anyway. We'll also get retail sales figures from the government before the opening bell talking about how our nation's retailers are faring, so that could be a determining factor as well.

COSTELLO: Carrie Lee, we'll get back to you later. Carrie Lee live from New York this morning. TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com