Fed sounds upbeat on economy

US CENTRAL bank the Federal Reserve yesterday left interest rates unchanged, as it issued a statement boosting hopes that the world&rsquo;s biggest economy is emerging from recession.<br /><br />The Fed said it is to keep rates ultra-low for some time to support the post-slump recovery.<br /><br />Short-term interest rates were kept at an all-time low of 0 per cent to 0.25 per cent, where they have been since last December when policymakers resorted to unprecedented measures to end the financial crisis. <br /><br />&ldquo;Conditions in financial markets have improved further and activity in the housing sector has increased,&rdquo; the central bank said in a statement following a two-day meeting of its top policymakers. <br /><br />The Fed also said its programme of purchasing mortgage-related securities, toxic assets that were one of the key causes of the credit crunch, will be boosted to nearly $1.5 trillion (&pound;918bn) and extended until March next year.But the programme will be slowed under the plans, in a step towards withdrawing it. The Fed did not unveil new measures to boost liquidity in the economy.<br /><br />Inflation will remain &ldquo;subdued&rdquo; for some time, the Fed added. <br /><br />The rate decision saw the dollar fall to a one-year low, with sterling hitting $1.64 and the euro reaching $1.48, before recovering later.<br />