The Associated Press

WASHINGTON - The Federal Reserve held a main short-term interest rate at a 45-year low Tuesday, an effort to keep the economic resurgence moving forward.

Fed chairman Alan Greenspan and his Federal Open Market Committee colleagues - the group that sets interest rate policy in the United States - kept the federal funds rate at 1 percent. The funds rate, the interest that banks charge each other on overnight loans, is the Fed's primary tool for influencing the economy.

Fed policy-makers think that current short-term rates "can be maintained for a considerable period." The decision was unanimous.

Holding the funds rate steady means that commercial banks' prime lending rate for many short-term consumer and business loans will remain at 4 percent, the lowest level since 1959. Maintaining a climate of near rock-bottom short-term borrowing costs might give consumers and businesses an incentive to spend and invest more and thus boost economic growth.

Many economists think that Fed policy-makers will leave rates unchanged not only at their last meeting this year - Dec. 9 - but also into part of 2004.

"The economic story in their minds is by no means yet written, and they want to be sure growth is on a significant and sustained path," said Lynn Reaser, chief economist at Banc of America Capital Management.