Washington, Aug 11 (Coal Geology) The US Federal Reserve said Tuesday it was keeping interest rates at their record low of near 0 percent as it warned that the country’s economic recovery was moving slower than expected.
The sluggish economy also prompted the central bank to take its first steps in more than a year to further stimulate growth, pledging to buy up more government debt by reinvesting holdings of mortgage-backed securities into long-term Treasury securities.
The central bank’s decision-making board in a statement said ‘the pace of economic recovery is likely to be more modest in the near term than had been anticipated’.
Spending by US households ‘remains constrained’ amid a stubbornly high jobless rate, slow-rising wages, lost wealth from the housing crisis and limited access to bank loans, the Fed said.
The central bank said inflation had remained low and that it would continue taking other actions ‘as necessary’ to keep the economic recovery alive.
The Fed’s benchmark federal funds rate would remain at the 0-0.25 percent range for ‘an extended period’, the statement said, maintaining language that has been used for months, despite some limited calls to begin raising rates.
One of the Fed board’s 10 members opposed the decision, arguing the Fed should no longer signal that it plans to keep rates at their record low for the near future.
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