10 Aug 2011

Fed to keep rates low for at least 2 years

8:58 am on 10 August 2011

The US Federal Reserve has announced it will keep its monetary policy stimulus in place for at least another two years, in an effort to support a flagging economy and fragile global markets.

The Fed says economic growth in the United States is proving considerably weaker than expected and it kept interest rates on hold at almost zeo.

Rates have been at that low since December 2008. The Fed previously said only that it would keep them low for ''an extended period.''

Analysts say it is unclear whether the decision, which involved no new commitment of funds for purchasing government bonds, will be enough to put a floor on a US stock market.

The US stock market has fallen more than 15% in the last two weeks.

After the statement from the Federal Reserve, the price of gold increased by 3% to $US1778.29 per ounce. Later it slipped to $US1736 per ounce.