FOMC holds fed funds rate steady, but cuts interest rate on excess reserves

WASHINGTON (MarketWatch) - The Federal Reserve on Wednesday left its short-term fed funds rate unchanged as expected, but it cut the rate it pays on excess bank reserves to 2.35% from 2.4%. The reduction in the rate on excess reserves was aimed at ensuring the fed funds rate stayed "well within" the central bank's target range of 2.25% to 2.5%. The vote was unanimous. The Fed also sounded a more upbeat note on the economy and noted a recent decline in inflation. The central bank said the economy is growing at a "solid rate" while overall inflation and core inflation "have declined and are running below 2%." Previously the bank had said inflation remained "near 2%." The Fed's statement also reaffirmed the bank will be "patient" on interest rates and is in no hurry to do anything.

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