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’s biggest economy is emerging from recession.
The Fed said it is to keep rates ultra-low for some time to support the post-slump recovery.
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.
“Conditions in financial markets have improved further and activity in the housing sector has increased,” the central bank said in a statement following a two-day meeting of its top policymakers.
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 (£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.
Inflation will remain “subdued” for some time, the Fed added.
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.