US interest rates to stay at 45-year low

Click to follow
The Independent Online

The US Federal Reserve yesterday opted to keep interest rates at a 45-year-low in order to keep the US economy's gradual improvement on track.

The Reserve's rate-setting open market committee said it was keeping the trend-setting federal funds rate at 1 per cent. It said it could "be patient" before lifting borrowing costs.

"The committee continues to believe that an accommodative stance of monetary policy, coupled with robust underlying growth in productivity, is providing important ongoing support to economic activity," it said.

"The evidence accumulated over the inter-meeting period confirms that output is expanding briskly. Although new hiring remains subdued, other indicators suggest an improvement in the labour market. Increases in core consumer prices are muted and expected to remain low."

It was expected that the committee would say that low rates could be allowed to persist for a "considerable period". Some analysts said the subtle change in terminology to "patient" could be interpreted as a sign rates might rise before too long.

Shortly before the announcement, the US government reported that that new orders for costly durable goods had been flat during December, reinforcing expectations that rates would remain the same.

Comments