Feds keep interest low to foster job growth
–(www.FinancialNewsUSA.com)– 01/05/2010 – Banking industry news provided by Financial News USA. The U.S. Federal Reserve sees a moderate economic recovery continuing in 2010, but needs to keep interest rates “exceptionally low” for an “extended period” to foster job growth, a Fed policymaker said on Monday.
Fed Governor Elizabeth Duke told an an economic forum that slack in the economy was likely to remain above historical norms for some time, helping to keep inflation subdued.
“In the current environment, the FOMC continues to anticipate that economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period,” Duke said, referring to the U.S. central bank’s policy-setting Federal Open Market Committee.
“Such policy accommodation is warranted to provide support for a return over time to more desirable levels of real activity and unemployment in the context of price stability.”
The Fed cut interest rates to near zero in December 2008 and created a host of emergency lending facilities to fight the worst recession in more than 70 years. It has pledged low rates for an extended period.
Fed watchers have focused on any changes in that language for clues to the timing of a possible tightening of monetary policy as the economy recovers. The FOMC maintained the “extended period” stance in its last statement on Dec. 15. About Financial News USA
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