Fed sounds an upbeat note
THE US Federal Reserve yesterday sounded a cautiously optimistic note about the US economy as it said it would keep its key interest rate unchanged at between 0 and 0.25 per cent.
It also announced it would extend the government’s $300bn (£182bn) programme to buy Treasury bonds until October.
The bond purchase, part of the Fed’s quantitative easing programme, had been expected to end next month, and is close to its $300bn limit.
The Fed added that it planned to slow the pace of the purchases “to promote a smooth transition in markets”.
Fed chairman Ben Bernanke “knows very well the risks associated with removing the stimulus too quickly,” Michael Woolfolk from Bank of New York Mellon said.
The Fed report said that, while economic activity was levelling out, it was likely to remain weak for a time.
“Household spending has continued to show signs of stabilising but remains constrained by ongoing job losses, sluggish income growth, lower housing wealth, and tight credit,” it said
The Fed has held interest rates at between 0 and 0.25 per cent since last December.