US Fed keeps interest rate low, sees moderate growth ahead

13 December 2011 20:01  [Source: ICIS news]

WASHINGTON (ICIS)--The US economy will see moderate growth in the near term, the unemployment rate will decline only gradually, and the European debt crisis poses a significant risk to the global economy, the Federal Reserve Board said on Tuesday.

As expected, the board said that it would maintain its record-low interest rate at 0% to 0.25% ­– now in place for three years.

The board also repeated its earlier expectation that the low interest rate would likely be maintained “at least through mid-2013”.

The central bank’s rate-setting federal open markets committee (FOMC) said that recent datasuggest that the economy has been expanding moderately, notwithstanding some apparent slowing in global growth”.

“While indicators point to some improvement in overall labour market conditions, the unemployment rate remains elevated,” the committee said, noting too that while “household spending has continued to advance, business fixed investment appears to be increasing less rapidly and the housing sector remains depressed.”

“The committee continues to expect a moderate pace of economic growth over coming quarters and consequently anticipates that the unemployment rate will decline only gradually,” the Fed statement said.

In an earlier and more detailed analysis, the Fed revised downward its expectations for US economic growth over the next two years.

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

By: Joe Kamalick
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