By Martin Crutsinger
The Associated Press

WASHINGTON - Federal Reserve policy-makers, worried about companies' inability to create jobs, held interest rates at a 45-year low Tuesday and signaled anew that they will be slow to order any future increase that could cramp the economy's recovery.

Private economists viewed the Fed policy statement as more somber than its comments after a similar meeting in late January, reflecting the fact that the central bank has seen two disappointing monthly employment reports since then.

Some economists said it was likely that the Fed would not raise its target for the federal funds rate, the interest that banks charge each other, from 1 percent until sometime in 2005. That was a change from the previous view that the Fed simply would wait until after the November election.

"The Fed is going to stand pat indefinitely," said Sung Won Sohn, chief economist at Wells Fargo in Minneapolis. "There is little likelihood that the Fed will even think about raising rates in 2004."

That would be good news for borrowers who are already enjoying the lowest interest rates in more than four decades. Commercial banks' prime lending rate, the benchmark for millions of consumer and business loans, has been at 4 percent, the lowest level since 1958, since the Fed last cut rates by a quarter-point last June.

And receding worries about possible Fed rate increases has helped to push long-term rates down as well, with the nationwide average for 30-year mortgages dropping last week to 5.41 percent, approaching the four-decade low set last year.

Wall Street ended the day with the Dow Jones Industrial Average up 82 points at 10,185, quite a difference from the market's reaction following the Jan. 28 meeting.

At that time, the central bank also left rates unchanged but dropped a promise it had been making since August to leave rates alone for "a considerable period," raising fears that a rate increase might be imminent and triggering a 142-point drop in the Dow.

However, at both the January meeting and this week, the Fed noted that "with inflation quite low and resource use slack," Fed officials believe they "can be patient" in raising interest rates.

The statement

The Federal Reserve statement Tuesday on interest rates:

The Federal Open Market Committee decided today to keep its target for federal funds rate at 1 percent.

The committee continues to believe that an accommodative stance of monetary policy, coupled with robust underlying growth in productivity, is providing important ongoing support to economic activity. The evidence accumulated over the intermeeting period indicates that output is continuing to expand at a solid pace. Although job losses have slowed, new hiring has lagged. Increases in core consumer prices are muted and expected to remain low.

The committee perceives the upside and downside risks to the attainment of sustainable growth for the next few quarters are roughly equal. The probability of an unwelcome fall in inflation has diminished in recent months and now appears almost equal to that of a rise in inflation. With inflation quite low and resource use slack, the committee believes that it can be patient in removing its policy accommodation.