22 Sep 2010

No change to US interest rates

11:11 am on 22 September 2010

The US Federal Reserve kept interest rates steady and made no change to monetary policy on Tuesday.

However, it expressed greater concern than previously about the sluggish pace of economic growth and low inflation and hinted it may do more later if needed.

The BBC reports the economy is set to dominate November's mid-term elections. Unemployment is almost 10%.

The recession in the United States ended in June 2009, but recovery has lost momentum this year with growth at an annualised rate of 1.6% in the second three months of 2010.

The Fed cut key interest rates to almost zero in December 2008 and later put money into the economy by buying $US1.7 trillion in federal debt and mortgage bonds.

Rates are still between zero and 0.25%.

Wait and see - Bernanke

Federal Reserve chairman Ben Bernanke says deflation (falling prices), is becoming a real concern and he's prepared to take a wait and see approach.

Standard & Poors chief economist David Wyss says that with interest rates already so low, the Fed has little choice left available to it.