WASHINGTON, 17 September 2003 — Federal Reserve officials opted yesterday to keep US interest rates at 45-year lows and said official borrowing costs could remain low for “a considerable period.”

The central bank’s policysetting Federal Open Market Committee said it had left the benchmark federal funds rate at 1 percent, a 1958 low hit after the Fed cut rates 13 times since early 2001 in an effort to foster a vigorous expansion.

In announcing their decision, policy-makers repeated a warning they first issued in May over what they termed a small risk that inflation could move undesirably low.

“The committee judges that on balance the risk of inflation becoming undesirably low remains the predominant concern for the foreseeable future. In these circumstances, the committee believes that policy accommodation can be maintained for a considerable period,” the Fed said in its post-meeting announcement.

The decision was widely expected by financial markets and the dollar slipped briefly after the announcement but then regained its earlier level. Stocks were little changed and bond prices were firmer.

“It’s no surprise really,” said Eric Green, senior economist at BNP Paribas in New York. “We have an economy that’s showing a lot of growth at this time, and prices that continue to decline, decelerate, and basically that is the take-away point.”

While numerous signs have emerged showing the US recovery picking up steam, the economy has yet to generate jobs, a failure economists said keeps alive the risk growth could falter once a temporary boost from tax cuts fades. Many forecasters expect the economy to grow near a robust 5 percent annual rate in the current quarter, a sharp step up from the second quarter’s 3.1 percent gain. A report issued earlier yesterday underscored the lack of inflation pressure. The so-called core Consumer Price Index, which strips out volatile food and energy costs, inched up just 0.1 percent in August, the Labor Department said.

Over the past 12 months the core rate has risen a meager 1.3 percent, the tamest pace in over 37 years.