US pledge to keep rates low
(18 December 2009 – USA) The US Federal Reserve has said that it will continue to keep rates exceptionally low for an extended period of time.
As the US economy starts to slowly improve, officials made the decision to keep the lending rate in a range of zero to 0.25 percent, saying that low interest rates are contingent on low rates of resource utilisation, subdued inflation trends and stable inflation expectations.
The Federal Open Market Committee said that household spending appears to be expanding at a moderate rate, although it appears to remain constrained by a weak labour market and tight credit.
The committee also noted that businesses are still cutting back on fixed investments and remain reluctant to add to payrolls, while deterioration in the labour market is ‘abating’.
The Labour Department reported that inflation will remain subdued for some time and the consumer price index, minus food and energy, rose 1.7 percent for the 12 months ending November, unchanged from October.
Chairman, Ben S. Bernanke, who faces a confirmation vote for a second term by the Senate Banking Committee tomorrow, is battling what he calls ‘significant headwinds’ of declining credit and continuing job losses.
Bloomberg News reported that while the economy has returned to growth after the deepest recession since the 1930s, most economists surveyed predict that the unemployment rate will exceed 10 percent through June. Consumer spending is still below its level of two years ago.
The Federal Open Market Committee said that household spending appears to be expanding at a moderate rate, although it appears to remain constrained by a weak labour market and tight credit.
The committee also noted that businesses are still cutting back on fixed investments and remain reluctant to add to payrolls, while deterioration in the labour market is ‘abating’.
The Labour Department reported that inflation will remain subdued for some time and the consumer price index, minus food and energy, rose 1.7 percent for the 12 months ending November, unchanged from October.
Chairman, Ben S. Bernanke, who faces a confirmation vote for a second term by the Senate Banking Committee tomorrow, is battling what he calls ‘significant headwinds’ of declining credit and continuing job losses.
Bloomberg News reported that while the economy has returned to growth after the deepest recession since the 1930s, most economists surveyed predict that the unemployment rate will exceed 10 percent through June. Consumer spending is still below its level of two years ago.
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