Fed insists it will keep benchmark rate near zero
Published 29/04/2010 | 05:00
Federal Reserve officials restated their intention to keep the benchmark interest rate near zero for an "extended period" and saw signs of life in the labour market yesterday.
"Economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels of the federal funds rate for an extended period," the Federal Open Market Committee said.
Chairman Ben Bernanke is contending with an economy that has been growing for almost a year without an increase in inflation or a decline in unemployment below 9.7pc. While consumer spending is recovering along with business investment, credit to households remains tight. A surge in corporate profits last quarter was led by demand from overseas and lower labour costs, according to results from Standard & Poor's 500 companies that have reported earnings this month.
Officials also said growth in household spending had "picked up recently." The job market was "beginning to improve".
US central bankers have kept the benchmark lending rate in a range of zero to 0.25pc since December 2008. Their purchases of $1.25 trillion in mortgage-backed securities, which ended last month, boosted the balance sheet to a record $2.34 tn. (Bloomberg)