US lending data disappoints as Fed officials play down rate hike

Kate McCann
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US CONSUMER credit failed to meet expectations for August and increased far less than expected, according to experts. Growth for July was also revised lower, the Federal Reserve said yesterday.

The news will force economists in America to look on the pace of economic expansion with caution and has led to calls for the Fed to hold interest rates at around zero until late next year to cope with the slowdown in credit. Interest rates in America have been kept close to zero since late 2008 in a bid to stave off the worst effects of the financial crisis.

Total consumer credit rose $13.5bn to $3.25 trillion in the US in August. Experts had predicted it to rise by $20bn, leaving a $7bn shortfall. The figure for July was revised down to show a gain of $21.6bn overall.

β€œIt still is premature to begin to raise interest rates – the labour market still has too much slack and the inflation rate is too low,” Federal Reserve Bank of New York president William Dudley said yesterday. He added that a rise could be on the cards by mid-2015.