More quantitive easing not on Federal Reserve agenda
Thursday 23 June 2011
The Federal Reserve blamed temporary factors for the current soft patch in the US economy, closing down for now any suggestion it could consider a third programme of quantitative easing.
The central bank's Federal Open Market Committee said the slowdown was caused by disruptions to global supply chains as a result of the Japanese tsunami and by US consumers' reaction to the spike in food and petrol prices, but it predicted a gradual resumption of the economic recovery through the rest of this year.
The Fed has printed $600bn of new money for the purchase of US government bonds to suppress market interest rates, but this second round of QE ends next week and the bank gave no indication it had considered an extension.
"The committee expects the pace of recovery to pick up over coming quarters and the unemployment rate to resume its gradual decline," it said in a policy statement that read almost exactly as Wall Street had anticipated.
At his press conference after the announcement, the Federal Reserve chairman, Ben Bernanke, said QE2 had eliminated the risk of deflation, but he appeared sceptical on the benefits of a third round of easing. The situation is much improved since last August when QE2 was proposed, he said.
In one change, though, the Fed did drop a hint on its longer-term forecast for prices. "Inflation has moved up recently, but the committee anticipates that inflation will subside to levels at or below those consistent with the committee's dual mandate [to promote price stability and maximum employment] as the effects of past energy and other commodity price increases dissipate."
The language suggested that monetary policy could remain loose for some time.
- 4 Iranian blogger found guilty of insulting Prophet Mohammad on Facebook sentenced to death
- 5 New Tricks: Dennis Waterman to leave the show after a decade of crime-solving
Stamford Hill council removes 'unacceptable' posters telling women which side of the road to walk down
Kim Kardashian 'nude pictures' leaked on 4chan weeks after Jennifer Lawrence 'The Fappening' scandal
Iranian blogger found guilty of insulting Prophet Mohammad on Facebook sentenced to death
Ice Bucket Challenge: US firefighter Tony Grider dies after participating in charity craze near power lines
Hitler’s former food taster reveals the horrors of the Wolf’s Lair
Scottish independence referendum: A nation divided against itself
Scottish referendum results: Cross-party consensus collapses amid Tory-Labour spat on the 'English question'
Scottish independence: David Cameron is becoming the 'George Bush of Britain'
Russia freezes Ukraine into submission: Kiev admits country doesn't have enough fuel for winter
Plebgate MP Andrew Mitchell called officer a 'little s**t', claim court documents 'exposing ex-Chief Whip's 'record of abusing police'
Archbishop of Canterbury admits doubts about existence of God
iJobs Money & Business
£400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...
Up to £100k or £450p/d: Saxton Leigh: My client is a leading commodities tradi...
£320 - £330 per day: Ashdown Group: The Ashdown Group have been engaged by a l...
To £75,000 + Pension + Benefits + Bonus: Saxton Leigh: My client is looking f...