Fed Leaves Rate near Zero:

The Federal Reserve kept its key interest rate near 0% Wednesday, and said it is prepared to take additional steps to try to fix the troubled U.S. economy and credit markets.  The Fed said it stands ready to purchase longer-term Treasury’s if it determines that such a move will help get credit flowing once again. This may help lower the yield on the government bonds and further lower the rates on various types of loans tied to Treasury.  While the Fed said there had been improvement in some financial markets, it is concerned that credit remains tight.  The Fed also warned of a decline in prices that could further slow economic activity, a condition that is generally known as deflation.  Deflation often prompts businesses to further cut production and consumers to delay purchases because they anticipate lower prices to come. Economists warn that deflation can have a more destructive impact on the economy than inflation.  The deflationary threat is really the bottom line, and the Fed wants to do everything they can to minimize the risk.