Fed cautious over growth

Steve Dinneen
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THE Federal Reserve is slightly more bullish about the state of the US economy, upgrading its prediction for growth for the year from three to 3.2 per cent.

The minutes of its January policy meeting, released yesterday, also reveal unemployment is expected to drop in the last quarter of 2010 but only from 9.7 to 9.6 per cent, slightly above the 9.5 per cent that was predicted in November.

The ten voting members said interest rates would remain at a record low for an “extended period” while unemployment stays high and inflation is low.

The members also debated an exit strategy for the Fed’s monetary stimulus package, causing Treasury debt prices to drop by more than a point last night. The members want to begin selling securities relatively soon as a way to cut back the massive supply of cash to the financial system.