US Fed warns of slowdown in economic recovery

10 August 2010 20:20  [Source: ICIS news]

HOUSTON (ICIS)--US Federal Reserve officials on Tuesday warned of a slowdown in the nation's economic recovery.

“Information received since the Federal Open Market Committee met in June indicates that the pace of recovery in output and employment has slowed in recent months,” the committee said. “Household spending is increasing gradually, but remains constrained by high unemployment, modest income growth, lower housing wealth, and tight credit.

“Business spending on equipment and software is rising; however, investment in nonresidential structures continues to be weak and employers remain reluctant to add to payrolls,” the committee said.

“Housing starts remain at a depressed level. Bank lending has continued to contract. Nonetheless, the Committee anticipates a gradual return to higher levels of resource utilisation in a context of price stability, although the pace of economic recovery is likely to be more modest in the near term than had been anticipated,” it added.

The Federal Open Market Committee said it would keep the federal funds rate at 0.00-0.25% and would keep reinvesting payments from agency debt and mortgage-backed securities into longer-term US Treasury securities to “help support the economic recovery in a context of price stability”.

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