2 Nov 2010

US stimulus measures being considered by Fed

9:21 am on 2 November 2010

The US Federal Reserve meets this week to decide on measures to further stimulate the United States economy.

The Federal Reserve has already tried quantitative easing, or printing money, to bring down interest rates. Its Open Markets Committee will meet on Tuesday and Wednesday.

An announcement will be made afterwards.

Radio New Zealand's economics correspondent says the decision could affect mortgage rates and the exchange rate in New Zealand.

AMP says the outcome will move the borrowing costs of New Zealand banks, but it is not clear in which direction rates will go.

The Reserve Bank surprised no-one by leaving the Official Cash Rate on hold at 3% last Thursday.

Then it said the rate will rise at some stage as the economy slowly recovers and inflation becomes more of a problem.

Goldman Sachs economist Philip Borkin says more American dollars in circulation will depress the value of the US dollar, pushing the value of the kiwi higher.