As expected, the U.S. Federal Reserve Board has left interest rates unchanged. The key overnight lending rate remains 1.25%.

The Fed also maintained its neutral stance on the current risks to long-run price stability and sustainable economic growth.

No one expected the Fed to change rates. While the U.S. economy appears to be struggling, the fears of war with Iraq are the biggest factor restraining growth. The Fed noted as much, saying, “Oil price premiums and other aspects of geopolitical risks have reportedly fostered continued restraint on spending and hiring by businesses.”

However, it said, “The Committee believes that as those risks lift, as most analysts expect, the accommodative stance of monetary policy, coupled with ongoing growth in productivity, will provide support to an improving economic climate over time.”

“In these circumstances, the Committee believes that, against the background of its long-run goals of price stability and sustainable economic growth and of the information currently available, the risks are balanced with respect to the prospects for both goals for the foreseeable future,” it concluded. Some had thought the Fed might move its bias from balanced to easing monetary policy

It also reported that the policy action was unanimous once again.