US Fed under pressure to add to economic stimulus
Stephen Foley is a former Associate Business Editor of The Independent, based in New York. He left in August 2012. In a decade at the paper, he covered personal finance, the UK stock market and the pharmaceuticals industry, and had also been the Business section's share tipster. Between arriving with three suitcases in Manhattan in January 2006 and his departure, he witnessed and reported on a great economic boom turning spectacularly to bust. In March 2009, he was named Business and Finance Journalist of the Year at the British Press Awards.
Tuesday 09 August 2011
The US Federal Reserve will discuss its options today for rebooting the recovery of the world's largest economy, in the teeth of a debt crisis on both sides of the Atlantic and stalling business and consumer confidence.
The central bank ended its second round of quantitative easing six weeks ago, only to find that economic growth has stalled again, leading some market players to predict more monetary policy easing.
However, economists doubt today's discussion by the Fed's interest rate-setting Federal Open Market Committee will result in any new promise to act, at least for the time being.
Kevin Logan, the chief US economist at HSBC, said higher inflation and expectations for inflation this year had raised the stakes. "Last year, the gate was wide open, but now they will have to be more cautious," he warned. "Even though things are tumultuous, they will be hopeful things get a little better and save their ammunition in case they get a little worse."
The Fed has kept official US interest rates at zero since December 2008 and has sought alternative tools to push market interest rates lower, too. In its second round of quantitative easing, known as QE2, it bought $600bn of US government bonds over eight months to the end of June. Options on the table today include replacing some of the short-term bonds it has bought with longer-dated debt, in the hope of putting extra downward pressure on long-term rates that affect borrowing costs for homebuyers in particular.
Other options include cutting the 0.25 per cent interest the Fed pays on private sector bank reserves, making it more likely that the banks will choose to lend the money to businesses and consumers. The Fed could also promise to keep official interest rates low for a fixed period.
The US economy grew at an annualised rate of just 0.4 per cent in the first quarter of this year.
Sales of the tablet are set to fall again, say analysts
Met Police confirm there was a 'minor disturbance' and that no-one was arrested
George Lucas criticises the major Hollywood film studios
Does Chris Grayling realise what a vague concept he is dealing with?
Trend which requires crisps, a fork and a strong stomach is sweeping Mexico's streets
Parties threaten resort's image as a family destination
I Am Bread could actually be a challenging and nuanced title
- 1 Indian footballer Peter Biaksangzuala dies after injuring spine doing somersault celebration
- 2 Jack the Ripper: Scientist who claims to have identified notorious killer has 'made serious DNA error'
- 3 Banksy arrest hoax: Internet duped by fake report claiming that the street artist's identity has been revealed
- 4 Drink alcohol and eat meat to improve male fertility - but cut down on coffee, studies suggest
- 5 Brian Harvey turns up at Downing Street and 'demands to speak to Prime Minister'
Jack the Ripper: Scientist who claims to have identified notorious killer has 'made serious DNA error'
Banksy arrest hoax: Internet duped by fake report claiming that the street artist's identity has been revealed
'Russian submarine spotted' by Swedish military off coast of Stockholm
Brian Harvey turns up at Downing Street and 'demands to speak to Prime Minister'
Kentucky gang rape: 15-year-old boy left in critical condition after sexual attack by group at party
Cameron is warned 'no possibility' of UK reducing immigration and that bid to bring in quota on migrant workers would be illegal
Residents should throw a street party and mix with immigrant neighbours, councils told
Russell Brand threatened with arrest after filming outside Fox News headquarters
London bus driver allegedly kicks gay couple off for kissing
Amal Alamuddin calls for the return of the Elgin Marbles from Britain: 'Injustice has persisted for too long'
Lord Freud: Tory welfare minister apologises after saying disabled people are 'not worth’ the minimum wage
iJobs Money & Business
£18 - 23k + Benefits: Guru Careers: We are seeking a Customer Service Executiv...
£60 - 65k + Benefits: Guru Careers: We are seeking a ASP.NET Web Developer / ....
£60,000 - £80,000: Saxton Leigh: Our client is an leading Asset Manager based...
£27000 - £32000 Per Annum: Clearwater People Solutions Ltd: Our large charity ...