Money world

Wall Street widely expects the U.S. Federal Reserve to keep short-term benchmark interest rates unchanged on Tuesday as the central bank grapples with a faltering economy, shaky financial system and higher prices.

While the federal funds rate will likely stay at 2 percent, more than one voting member of the rate-setting Federal Open Market Committee policy-makers may dissent and call for higher rates.

The Fed held rates steady when the panel last met in June. It last eased in April, bringing the fed funds rate down by a cumulative 3.25 percentage points from mid-September last year.

A Reuters poll on Friday showed most primary dealers expected the Fed to hold rates steady through the end of the year, with the next move likely to be a rate increase sometime next year.

Following are some factors policy-makers are considering:

ECONOMY

The U.S paydayloans. unemployment rate rose to 5.7 percent in July, its highest in more than four years, as employers cut payrolls by 51,000 nonfarm jobs, the seventh straight month of declines.

The U.S. economy grew 1.9 percent in the second quarter, as consumer spending was bolstered by the government’s tax rebate checks. Gross domestic product for the final quarter of 2007 was revised to show contraction of 0.2 percent. 

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