Fed to maintain pledge to keep interest rates low
US central bank, the Federal Reserve, will end its two-day meeting today and are likely to leave interest rate at the record low of 0% and 0.25%.
Rates have been at this level since December 2008, as a result of subdued inflation and high unemployment.
It has reiterated its policy to maintain low interest rates for “an extended period” and is likely to repeat that pledge.
Chairman of the Federal Reserve, Ben Bernanke, has said he is confident that the US won’t fall back into a “double dip” recession but remains cautious at the same time.
After suffering the worst recession in decades, the world’s largest economy has now been growing for about a year.
However, the rate of growth is not yet strong enough to bring down the level of unemployment – currently at 9.7%.
The Fed’s comments come as US Treasury Secretary, Timothy Geithner, warned that the US economy “is still going through an incredibly difficult period”.
He told a congressional hearing: “Millions of Americans are still looking for work and are suffering from the damage of a deep recession. The impact of this crisis will be lasting”.
However, Mr Geithner said steps taken by the US Government to stimulate the economy had cost less than expected.
In related news, yesterday the National Association of Realtors (NAR) revealed a surprise drop in sales of previously owned homes in the US for the month of May, despite the Government tax credit designed to entice homebuyers.
The industry body said sales fell 2.2% in May to an annual rate of 5.66 million units, up from a revised 5.79 million units in April.
However, the figure is up 19% on May 2009 levels.
Most analysts had expected sales to grow to 6.10 million units in the month as homebuyers rushed to complete contracts under the Government tax incentive program.