US holds interest rates at 1.75

The Federal Reserve hinted at a future rate hike, illustrating confidence in the fact the current rate should see the US lift itself out of current economic difficulties.

The open market committee indicated that financial market weakness had slowed the growth of the economy, which since the spring had been heightened by widespread concerns over corporate accounting.

The announcements which some economists interpreted as potentially signalling a future rate cut, showed a marked change to a gloomier outlook. Last month, new data illustrated the fact that sharp stock market falls had severely dented consumer confidence and that the US economy was far weaker than previously thought.

In mid-July, Alan Greenspan, chairman of the Federal Reserve had told congress he expected the economic recovery to accelerate gradually.