WASHINGTON: The US Federal Reserve left unchanged near-zero interest rates and its massive bond-buying programme yesterday, saying growth was modest in the world’s largest economy.
The Fed said that the easy-money monetary policy would be appropriate as long as the unemployment rate remains above 6.5 percent. Wrapping up a two-day policy meeting, the Federal Open Market Committee said it would continue to buy $85bn in bonds per month to help tamp down longer term interest rates that have been helping support growth, and in particular the housing market recovery.
Pointing to economic growth “at a modest pace during the first half of the year,” the FOMC said it would keep buying mortgage-backed securities at a pace of $40 billion and longer-term securities at a pace of $45bn Treasury per month.
By reinvesting the mortgage-backed securities and rolling over maturing Treasury securities, the Fed said it “should maintain downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative.”
The Fed reiterated that it would keep its accommodative monetary policy “for a considerable time” after the asset-purchase program ends “and the economic recovery strengthens.”
The economic picture was further brightened by the ADP National Employment Report, which showed private employers added 200,000 jobs in July, maintaining June’s pace. It offered hope the government’s comprehensive employment report tomorrow could show a recent run of fairly strong job gains extended to July.
Agencies
