US Federal Reserve keeps interest rates near zero

22 June 2011 18:02  [Source: ICIS news]

HOUSTON (ICIS)--The Federal Reserve Board will maintain its key interest rate at the historically low 0.00-0.25%, it said on Wednesday.

The rate-setting Federal Open Markets Committee (FOMC) said that the economic recovery is continuing at a moderate pace - although more slowly than the group had expected.

Plus, the nation's labour market has weakened more than the committee expected, it said.

Some of the reasons behind the slow recovery are temporary, the committee said.

Food and energy prices slowed down the economy, the committee said. The earthquake and tsunami in Japan also dragged the economy.

However, investments in the nation's nonresidential construction market remains weak, and the housing market remains depressed, the committee said.

In fact, the committee expects inflation to remain stable for the long term.

In announcing that the key federal funds rate would remain at 0.0-0.25% - where it has been since December 2008 - the group said that it "continues to anticipate that economic conditions - including low rates of resource utilisation and a subdued outlook for inflation over the medium run - are likely to warrant exceptionally low levels for the federal funds rate for an extended period”.

Paul Hodges studies key influencers shaping the chemical industry in Chemicals and the Economy

By: Al Greenwood
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