Low inflation worries US Federal Reserve
Wednesday 22 September 2010
The Federal Reserve said it was concerned that inflation rates are unhealthily low in the US, and it could act again soon to boost prices and economic activity.
In its hotly anticipated statement, after the latest meeting of its Federal Open Market Committee, the central bank opened the door to more intervention in the financial markets before the year's end, cheering stock markets.
One day after economists declared that the US recession was officially over, the Fed maintained it was concerned about stubbornly high unemployment and the sluggish recovery.
Official interest rates are being held near zero by the Fed, and it has been extending the duration of its $1.75 trillion programme of "quantitative easing", whereby it has printed new money to buy government and mortgage-related debt in order to push market interest rates lower too.
But yesterday it suggested it will go further after a summer of weakening data that had raised concerns that price deflation could take hold and send the economy into a double-dip.
"Measures of underlying inflation are currently at levels somewhat below those the committee judges most consistent, over the longer run, with its mandate to promote maximum employment and price stability," the FOMC said. "[The Fed] is prepared to provide additional accommodation if needed to support the economic recovery and to return inflation, over time, to levels consistent with its mandate."
Earlier, the Commerce department said builders began work on new homes at an annualised rate of 598,000 units in August, up 10.5 per cent to the highest level since last November. Christoph Balz, at Commerzbank, said the market was recovering, after having dropped away when government subsidies for new homebuyers ran out in the spring. But with foreclosures looming he cautioned against "euphoria" over the data.
Diving in at the deep end is no excuse for shirking the style stakes
- 2 Why I'm on the brink of burning my Israeli passport
- 4 War is war: Why I stand with Israel
- 5 Blackest is the new black: Scientists have developed a material so dark that you can't see it...
Ian Thorpe gay: Olympic swimmer comes out in Parkinson interview
Stephen Fry ‘criticises Operation Yewtree in dinner party rant’ calling for tougher laws to deter false sex abuse allegations
Israel-Gaza conflict: ‘Sderot cinema’ image shows Israelis with popcorn and chairs 'cheering as missiles strike Palestinian targets'
Israel-Gaza conflict: Israeli air strike destroys home for the disabled killing two women residents
Israel-Gaza conflict: Israeli PM says conflict may 'continue for a long time' as hundreds of Palestinians flee their homes
Sustained immigration has not harmed Britons' employment, say government advisers
War is war: Why I stand with Israel
7/7 memorial defaced on anniversary of 2005 attacks with ‘Blair lied thousands died’ graffiti
Australia facing international condemnation after turning around Sri Lankans at sea
Even when it brutalises one of its own teenage citizens, America is helpless against Israel
Socialist Worker called to apologise over ‘vile’ article saying Eton schoolboy Horatio Chapple's death is ‘reason to save the polar bears’
iJobs Money & Business
£70000 per annum: Harrington Starr: Information Security Manager (ISO 27001, A...
£75000 - £85000 per annum + ex bens: Deerfoot IT Resources Limited: Biztalk Te...
£60000 per annum: Harrington Starr: Trade Desk Specialist (FIX, Linux, Windows...
£35000 per annum: Harrington Starr: Service Desk Analyst (Windows, Active Dire...