06 April 2010 20:56 [Source: ICIS news]
WASHINGTON (ICIS news)--US central bank officials see a continuing if moderate recovery with subdued inflation, according to bank meeting minutes released on Tuesday, suggesting that record low interest rates will be maintained for a considerable time.
In the minutes of the 16 March meeting of the Federal Reserve Board’s rate-setting federal open market committee (FOMC), the central bank governors agreed that while incoming information was mixed, it “generally confirmed that the economic recovery was likely to proceed at a moderate pace”.
The bank’s top executives and managers also agreed that “the latest labour market readings had been mildly encouraging, with a considerable increase in temporary employment, especially in the manufacturing and information technology sectors”.
At the 16 March FOMC meeting, officials decided to maintain the current 0% to 0.25% rate for the central bank’s key federal funds rate.
The Fed set that interest rate range - the lowest in the central bank's 95-year history - in December 2008.
Reasons for continuing that record-low interest rate included, according to the minutes, “recent inflation readings ... suggesting a slightly greater deceleration in consumer prices than had been expected”.
The minutes state that “In light of stable longer-term inflation expectations and the likely continuation of substantial resource slack, they [Fed governors] generally anticipated that inflation would be subdued for some time”.
Although the Fed has indicated that at some point as the nation’s economy continues its moderate recovery, it will have to resume rate increases, the FOMC meeting minutes indicate that policy shift is not imminent.
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