Financial Watch

The U.S. Federal Reserve decided to leave interest rates unchanged, saying the current recovery will not result in rampant inflation, the board announced Wednesday.

The central bank kept the target range for its federal funds at between zero per cent and one-quarter of one percentage point, a record low level for the benchmark rate.

The Federal Open Market Committee (FOMC) — the group that meets concerning interest rates — said the U.S. recovery is still in an early enough stage that increased industrial production will not translate into higher prices any time soon.

Interest rates fell in the bond market Thursday after concerns grew that a bailout for Greece might not be enough to help the country through its fiscal crisis.

Renewed questions about the Greek government’s ability to make its debt payments have pushed its borrowing costs higher. Investors outside Greece don’t want problems there to spill to other markets. That drove up demand for Treasurys.

Prices on Treasurys rose and yields dropped.

The Greek government on Thursday asked the European Union and the International Monetary Fund for greater insight about potential financial aid. Officials from the EU and the IMF are scheduled to meet with Greek leaders on Monday.

San Francisco Federal Reserve President Janet Yellen said her own thinking has turned the corner, and she’s now confident “the economy is on the right track,” according to remarks prepared for delivery before a meeting of Financial Executives International.

“I expect the pace of recovery to gain momentum over the course of this year and next as households and businesses regain confidence, overall financial conditions continue to improve, and lenders increase the supply of credit,” she said, in the prepared text.

“Even as we applaud the economic turnaround, it’s important not to lose sight of just how fragile this recovery is and how far we yet have to go before things return to normal.”

After rising for a month, the average interest rate for a 30-year fixed loan declined to 5.07% this past week from 5.21% the previous week, Freddie Mac said in its weekly survey of lenders.

Fixed-rate 15-year mortgages, a popular option for people refinancing to pay off their homes more quickly, averaged 4.40%, down from 4.52%.

Rates on adjustable mortgages also fell slightly, Freddie Mac said. A news release on the survey was expected to be posted later Thursday.

Interest rates rose in the bond market Wednesday after a range of reports signaled that the economy is recovering.

Prices on most Treasurys fell, driving yields higher.

Demand for safety holdings like Treasurys fell after Federal Reserve Chairman Ben Bernanke said the economy is recovering. Economic reports and improved quarterly earnings at chipmaker Intel Corp. and the big bank JPMorgan Chase & Co. bolstered the sense that business conditions are getting better.

The yield on the benchmark 10-year Treasury note maturing in February 2020 rose after a three-day slide. The yield advanced to 3.87 percent in late trading from 3.82 percent Tuesday. Its price fell 11/32 to 98 1/32. The 10-year yield is linked to rates on mortgages and other consumer loans.

Interest rates fell in the bond market Monday ahead of a parade of corporate earnings reports.

The profit levels and forecasts from companies will give investors important clues about the strength of the economy. The uncertainty about the outlook made some investors cautious and increased demand for safe investments.

Treasury prices rose and yields dropped as well because investors got a break from the flow of new debt entering the market. The Treasury Department last week auctioned $82 billion in debt. The next auctions aren’t for two weeks.