Federal Reserve still cautious on growth

A CAUTIOUS Federal Reserve yesterday said the US economy was still too weak for it to reduce its aggressive efforts to stimulate growth.

Following its two-day meeting the central bank said it would continue its $85bn a month bond and mortgage-backed security buying programme and keep interest rates at their current record low.

The Fed said it now expected the unemployment rate, which was 7.7 per cent last month, to improve to an average of 7.3 to 7.5 per cent in the fourth quarter, but said it was unlikely to hit the 6.5 per cent rate needed for it to consider hiking interest rates before 2015.

“We are seeing improvement,” Fed chairman Ben Bernanke said. “One thing we would need is to see this is not temporary improvement.”

Fed officials now expect growth in a range of 2.3-2.8 per cent in 2013, down from 2.3-3.0 per cent in their December projections.