News Column

Federal Reserve Announces US to Keep Rates Low Until 2015

Oct. 24, 2012
Interest Rates

The US Federal Reserve on Wednesday said it would keep its benchmark interest rate at historic lows of 0 to 0.25 per cent as it seeks to bolster economic growth, but announced no further stimulus measures after taking new action last month.

The central bank said the US economy was growing at a "moderate pace" and that it would continue to keep rates low through at least mid-2015 as the employment situation continues to rebound.

The Fed said household spending advanced "a bit more quickly" and that the housing market improved even as business investment slowed. Inflation had picked up as energy prices rose.

No major announcements had been expected from the central bank after it announced a new bond buying programme last month and as it was unlikely to take a major change just prior to the US elections.

At its September meeting, the US central bank announced a move to expand its holdings of long-term securities by buying up 40 billion dollars a month of mortgage-backed securities for an indefinite period.

The Fed said Wednesday it would continue that programme, called QE3. It is the third round of quantitative easing by the Federal Reserve since 2008 when the country dipped into recession.

The Fed will also continue through the end of the year its Operation Twist programme to buy long-term bonds with proceeds from the sale of shorter-term bonds.

It indicated that if the labour market "does not improve substantially" it would continue its assets purchases and that it would keep interest rates low "for a considerable time after the economic recovery strengthens."

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Source: Copyright 2012 dpa Deutsche Presse-Agentur GmbH

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