No U-turn on economic aid, Bernanke insists

The US Federal Reserve stood firm in its commitment to an exceptionally loose monetary policy in the world's largest economy, dismissing concerns yesterday over inflation and promising to hold interest rates at their current zero rate for an extended period.

While other central banks around the world have begun to tighten monetary policy – or at least to signal that they soon may – the latest statement by the Fed's federal open market committee (FOMC) was notable for its adherence to previous guidance.

"Economic conditions, including low rates of resource utilisation, subdued inflation trends, and stable inflation expectations, are likely to warrantexceptionally low levels for the federal funds rate for an extended period," it said. The Fed's decision was accompanied by an unprecedented televised press conference by its chairman, Ben Bernanke. Following in the footsteps of other central bankers, including the heads of the Bank of England and the European Central Bank, Mr Bernanke will take questions from the media after each FOMC decision from now on, in the hope that increased access and transparency will defuse persistent criticism of the Fed.

Loose monetary policy, and the subsequent weakness of the dollar, has turned the Fed into a lightning rod for criticism from the right of the political spectrum, but the FOMC appeared unruffled by commodity price inflation, including the above-$100 price of a barrel of oil and the consequent surge in petrol prices in the US. Its slightly brighter assessment of the economy added no new warnings on inflation, except to note that it had "picked up" since the last meeting in March.

"The economic recovery is proceeding at a moderate pace and overall conditions in the labour market are improving gradually" it said.

The Dow Jones Industrial Average spiked higher in the moments after the statement was released, as traders scaled back their expectations for tighter monetary policy later this year. The Fed will finish its programme of quantitative easing – the purchase of $600bn of US Treasuries – by the end of June, but stuck by its promise to keep replacing the bonds when they expire.

The Fed deliberated monetary policy against a backdrop of the continuing high unemployment rate, which was 8.8 per cent last month, and weakening economic growth. GDP figures for the first quarter will be released this morning and are expected to have fallen to around 2 per cent, from anannualised rate of 3.1 per cent in the final three months of 2010.

The last piece of economic datareleased before the GDP number was information on durable goods orders for March, a key gauge of business investment. New orders for manufactured goods meant to last at least three years increased 2.5 per cent, in line with expectations. The figure was even better because the Commerce department revised the figure for February from a decline to an increase of 0.7 per cent.

Start your day with The Independent, sign up for daily news emails
ebooksAn unforgettable anthology of contemporary reportage
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Digital Optimisation Executive - Marketing

£30000 - £35000 per annum: Recruitment Genius: The UK's fastest growing, multi...

Recruitment Genius: Financial Reporting Manager

£70000 - £90000 per annum: Recruitment Genius: A Financial Reporting Manager i...

Recruitment Genius: Payments Operations Assistant

£23000 - £25000 per annum: Recruitment Genius: They win lots of awards for the...

Recruitment Genius: Telephone Debt Negotiator

£13500 - £20000 per annum: Recruitment Genius: This nationwide enforcement com...

Day In a Page

Sepp Blatter resignation: The beginning of Fifa's long road to reform?

Does Blatter's departure mean Fifa will automatically clean up its act?

Don't bet on it, says Tom Peck
Charles Kennedy: The baby of the House who grew into a Lib Dem giant

The baby of the House who grew into a Lib Dem giant

Charles Kennedy was consistently a man of the centre-left, dedicated to social justice, but was also a champion of liberty and an opponent of the nanny-state, says Baroness Williams
Syria civil war: The harrowing testament of a five-year-old victim of this endless conflict

The harrowing testament of a five-year-old victim of Syria's endless civil war

Sahar Qanbar lost her mother and brother as civilians and government soldiers fought side by side after being surrounded by brutal Islamist fighters. Robert Fisk visited her
The future of songwriting: How streaming is changing everything we know about making music

The future of songwriting

How streaming is changing everything we know about making music
William Shemin and Henry Johnson: Jewish and black soldiers receive World War I Medal of Honor amid claims of discrimination

Recognition at long last

Jewish and black soldiers who fought in WWI finally receive medals after claims of discrimination
Beating obesity: The new pacemaker which helps over-eaters

Beating obesity

The new pacemaker which helps over-eaters
9 best women's festival waterproofs

Ready for rain: 9 best women's festival waterproofs

These are the macs to keep your denim dry and your hair frizz-free(ish)
Cycling World Hour Record: Nervous Sir Bradley Wiggins ready for pain as he prepares to go distance

Wiggins worried

Nervous Sir Bradley ready for pain as he prepares to attempt cycling's World Hour Record
Liverpool close in on Milner signing

Liverpool close in on Milner signing

Reds baulk at Christian Benteke £32.5m release clause
On your feet! Spending at least two hours a day standing reduces the risk of heart attacks, cancer and diabetes, according to new research

On your feet!

Spending half the day standing 'reduces risk of heart attacks and cancer'
With scores of surgeries closing, what hope is there for the David Cameron's promise of 5,000 more GPs and a 24/7 NHS?

The big NHS question

Why are there so few new GPs when so many want to study medicine?
Big knickers are back: Thongs ain't what they used to be

Thongs ain't what they used to be

Big knickers are back
Thurston Moore interview

Thurston Moore interview

On living in London, Sonic Youth and musical memoirs
In full bloom

In full bloom

Floral print womenswear
From leading man to Elephant Man, Bradley Cooper is terrific

From leading man to Elephant Man

Bradley Cooper is terrific