2 May 2013

US interest rate held by Fed

10:05 am on 2 May 2013

The US Federal Reserve is keeping interest rates steady and sticking to its quantitative easing bond-buying programme.

The Federal Open Market Committee on Wednesday held its key interest rate at zero to 0.25%.

A bond buying programme worth $US85 billion per month also remains in place, in an effort to keep borrowing costs low and bolster the economy.

The bank said unemployment remained too high for a change in the quantitative easing policy.

"Information received since the Federal Open Market Committee met in March suggests that economic activity has been expanding at a moderate pace ... but fiscal policy is restraining economic growth," a statement said.

The BBC reports the US economy rebounded in the first quarter to grow by 2.5%, but was still below expectations.

The Federal Reserve uses quantitative easing to increase the money supply and improve liquidity in the financial system in the hope of sparking economic growth and supporting employment.