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Fed holds spending plan amid slow recovery (AFP)

WASHINGTON (AFP) – The US Federal Reserve Tuesday held interest rates near zero as expected, saying the economic recovery was too weak to reduce high unemployment, and left its massive spending plan intact.

“Information received since the Federal Open Market Committee met in November confirms that the economic recovery is continuing, though at a rate that has been insufficient to bring down unemployment,” the FOMC said in a statement at the end of the panel’s final meeting of the year.

As widely expected, the central bank left its key federal funds rate target between zero and 0.25 percent, where it has been since December 2009 in a bid to support recovery from the Great Recession.

The panel “continues to anticipate that economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels for the federal funds rate for an extended period,” it said.

The Fed noted “disappointingly slow” progress toward reaching the goals of its mandate to foster maximum unemployment and price stability, with underlying inflation hovering at a “somewhat low” level.

The conditions warrant the continuation of a 600-billion-dollar program of bond purchases announced at the last FOMC meeting in early November, as well as reinvesting in its securities holdings, the policymakers said.

“To promote a stronger pace of economic recovery and to help ensure that inflation, over time, is at levels consistent with its mandate, the committee decided today to continue expanding its holdings of securities as announced in November.

“The committee will maintain its existing policy of reinvesting principal payments from its securities holdings. In addition, the committee intends to purchase 600 billion dollars of longer-term Treasury securities by the end of the second quarter of 2011, a pace of about 75 billion dollars per month.”

The breaking news, Fed holds spending plan amid slow recovery
(AFP)
quoted from US Economy

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