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Friday 14th of August 2009
August 13, 2009

US Fed holds interest rates and is optimistic for the future


by Kay Murchie
”US

The US Federal Reserve has yet again unanimously kept interest rates on hold at between 0% and 0.25% - as widely expected.

The US Central Bank said that the current low levels of interest rates will likely continue “for an extended period” to aid the continuing recovery of the world‘s largest economy.

The Fed also talked of an upturn with in the economy and said: “while economic activity is likely to remain weak for a time”, it had started to “level off”.

In a statement, the Fed said: “Conditions in financial markets have improved further in recent weeks. Household spending has continued to show signs of stabilising but remains constrained by ongoing job losses, sluggish income growth, lower housing wealth and tight credit.”

Optimism in the US comes via a number of reports; last week the Labor Department revealed that 247,000 jobs were lost in July in the US - much less than analysts had forecast.

The surprise fall meant the US unemployment rate dropped from 9.5% in June to 9.4% in July - the first fall since April 2008.

In addition, it was revealed that US exports had risen by 2% to $125.8 billion in June, an indication of an improvement in the manufacturing sector.

In a bid to boost the economy, the Fed and the US Government have implemented a series of measures to help the US economy. One being President Obama’s $787 billion economic stimulus package, while last autumn, the $700 billion Troubled Assets Relief Program (TARP) was established for the banking sector.

The news comes as the German and French economies, Europe’s two largest, have both experienced economic growth during the second quarter of 2009 and have emerged from recession.

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