Washington, D.C., United States (AHN) – The U.S. Federal Reserve promised on Tuesday that it would hold interest rates at record lows for at least two years. The Fed had held on to the record-low key lending rate since December 2008 to help boost the American economy.

The decision was based on a 7-3 vote, which was the first time in 20 years that three Fed members dissented. The three members who dissented were Federal Reserve Bank of Dallas President Richard Fisher, Federal Reserve Bank of Minneapolis President Narayana Kocherlakota and Federal Reserve Bank of Philadelphia President Charles Plosser.

Besides holding the interest rate until the middle of 2013, the Fed said it would consider additional measures to support the weak American economy, worsened by Standard & Poor’s downgrade of the country’s credit rating last week to AA+ due to the impasse on the debt limit issue.

The stock market, which dipped following the S&P downgrade, made a dramatic rebound on Tuesday after the Fed announcement. The Dow Jones industrial average ended up by 429 points, which was almost a 4 percent rise – the largest increase in two years.

The Fed policy gave American companies and consumers with more certainty about the availability of low-cost borrowing for major purchases such as vehicles or homes. At the same time, it is expected to encourage investments and risk-taking to convince the markets that the cost of borrowing will not go up for at least two years.

However, the policy is an indicator that the U.S. economy will continue to crawl until the end of President Barack Obama’s first term in office, while wages will remain stagnant and high unemployment rate will continue.

With the policy on benchmark lending rates out, investors are waiting if the Fed would also announce a new round of quantitative easing. The Fed has carried out two rounds of federal stimulus programs, but apparently is hesitant to further pump prime the economy over fears that it would have little impact and could even be inflationary.

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