Friday 15 December 2017

Fed set to keep stimulus as economy still flagging

Fed chairman Ben Bernanke
Fed chairman Ben Bernanke

FEDERAL Reserve officials said they will maintain record monetary stimulus to support a flagging economic recovery after completing a $600bn bond-purchase programme as scheduled this month.

"The economic recovery is continuing at a moderate pace, though somewhat more slowly than the committee had expected," the Federal Open Market Committee said yesterday in a statement after a two-day meeting in Washington.

Fed policy makers reduced their economic-growth projections while raising forecasts for the jobless rate this year and next.

Fed chairman Ben Bernanke has said record-low interest rates are still needed to spur a recovery that remains "frustratingly slow" two years after the recession ended.

Consumer spending has been held back by falling home values, accelerating inflation and an unemployment rate that rose to 9.1pc last month. At the same time, Bernanke has said growth is likely to pick up as commodity costs recede and factories overcome disruptions of supplies from Japan.

"Recent labor market indicators have been weaker than anticipated," the statement said. "The slower pace of the recovery reflects in part factors that are likely to be temporary," such as supply chain disruptions stemming from the March earthquake and tsunami in Japan.

(Bloomerg)

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