US Fed continues to taper support for economy

The US Federal Reserve tonight said it saw enough growth in economic activity to continue cutting its bond-buying stimulus programme by another $10bn (£6bn) a month, despite a poor first quarter gross domestic product report earlier in the day.

The Fed’s bond buying has helped keep interest rates near zero as the US economy recovered from the financial crisis.

The Fed also repeated that it is likely to keep benchmark interest rates near zero for a “considerable time” even after its bond buying stimulus programme ends.

The announcement will reduce the Fed’s monthly bond purchases to $45bn from $55bn and keep the central bank on schedule to finish the programme as soon as October.

“Information received since the Federal Open Market Committee met in March indicates that growth in economic activity has picked up recently, after having slowed sharply during the winter in part because of adverse weather conditions,” the FOMC said in its statement.

US shares were little changed after the Fed announcement.

Earlier, the Commerce Department said gross domestic product expanded in the first quarter at only 0.1 percent annual rate, the slowest since the fourth quarter of 2012.

The Commerce Department said the unusually harsh winter in the United States had hurt exports and caused businesses to cut back on investment spending.