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September 22, 2010    

US Fed leaves interest rates at record low

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by Kay Murchie

The Federal Reserve yesterday elected to keep US interest rates at the historically low level of between 0% and 0.25%, as widely expected.

Interest rates in the world’s largest economy have been at the low level since December 2008 and the bank has previously said that as a result of subdued inflation and high unemployment, low interest rates are required for “an extended period”.

Meanwhile, the Fed has suggested it is prepared to inject more money into the economy, if needed.

In a statement, the Fed said it would “continue to monitor the economic outlook and financial developments and is prepared to provide additional accommodation if needed to support the economic recovery and to return inflation, over time, to levels consistent with its mandate”.

In other news for the world’s largest economy, the Commerce Department yesterday revealed housing starts jumped in August to a four-month high.

According to the Commerce Department, construction of new US homes rose 10.5% last month to a seasonally adjusted annual rate of 598,000 units – beating analysts expectations of 550,000.

In the meantime, applications for building permits, a barometer of future home construction, also rose 1.8% in the month, after plummeting by 4.1% in July.
On an annual basis, housing starts are up 2.2%.

The data suggests the housing market may be starting to pick up after the withdrawal of a Government tax incentive in April resulted in a fall in activity thereafter.

Meanwhile, earlier this week, Paris-based Organisation for Economic Co-operation and Development (OECD) said the US will avoid a double-dip recession.

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