In order to prevent any deflation, the US Federal Reserve has decided to maintain its interest rates between zero and 0.25%, as it has done for the last year.
AFP - The US Federal Reserve Wednesday extended its near-zero interest rate policy and maintained its view that exceptionally low rates are likely to remain in effect "for an extended period."
The central bank, concluding a two-day policy meeting, maintained the federal funds base rate of a range of zero to 0.25 percent, which has been in place for the past year.
The Federal Open Market Committee headed by chairman Ben Bernanke did acknowledge some improvement in economic conditions, notably in the troubled labor market, but indicated this was not enough to shift away from a massive stimulus effort.
The panel said that recent data "suggests that economic activity has continued to pick up and that the deterioration in the labor market is abating," and noted that the housing sector "has shown some signs of improvement over recent months."
Still, the FOMC said it sees "substantial resource slack likely to continue to dampen cost pressures: and predicted that "inflation will remain subdued for some time."
These conditions "are likely to warrant exceptionally low levels of the federal funds rate for an extended period," the FOMC statement said.
Date created : 2009-12-16