Fed to keep policy loose

A SLUGGISH recovery and continued risks to the economy saw the Federal Reserve hold rates at its August meeting, but said its $300bn (&pound;184bn) Treasury purchase programme would end in October &ldquo;in light of the evolving economic outlook and conditions in financial markets&rdquo;.<br /><br />The minutes showed that &ldquo;most participants saw the economy as likely to recover only slowly in the second half of this year, and all saw it as still vulnerable to adverse shocks&rdquo;.<br /><br />Policy makers also discussed slowing down purchases of mortgage bonds to minimise disruptions at the end of their programme.<br /><br />Paul Dales at Capital Economics, said: &ldquo;The minutes suggest the Fed would probably prefer to keep policy too supportive for too long rather than risk extinguishing the recovery and sending the economy back into recession.&rdquo;