Fed sounds cautious note
THE US Federal Reserve said last night that the recession was easing as it kept interest rates on hold, but warned that economic activity would “remain weak for a time”.
It also vowed to press on with its strategy of buying up mortgage-related debt and government bonds.
America’s central bank, chaired by Ben Bernanke, kept interest rates at between zero and 0.25 per cent and calmed fears about the possibility of deflation.
But it said inflation would remain “subdued for some time” and forecast that rates were likely to remain at their current level for “an extended period”.
The Fed also said it would push ahead with its promise to buy up $1.45 trillion in mortgage-related debt by the end of the year and $300bn in government debt by autumn. It added that conditions in financial markets had improved.