WASHINGTON, March 18 (Xinhua) -- U.S. Federal Reserve
on Wednesday held a key interest rate unchanged at a record low of between zero
to 0.25 percent while announcing new steps to help lift the country out of the
longest recession in a quarter century.
To provide greater support to mortgage lending and
housing markets, the central bank announced it will buy up to an additional 750
billion dollars of agency mortgage-backed securities, bringing its total
purchases of these securities to up to 1.25 trillion dollars this year.
It also will increase its purchases of debt issued or
guaranteed by the nation's two mortgage giants Fannie and Freddie this year by
up to 100 billion dollars to a total of up to 200 billion dollars.
Moreover, it will buy up to 300 billion dollars in
long-term U.S. Treasury bonds over the next six months to help improve
conditions in private credit markets.
Doing so would help the ailing economy because many
kinds of debt -- from mortgages to corporate bonds -- are linked to Treasury
rates. Fed purchases could boost Treasury prices and drive down their rates.
That would ripple through and lower rates on other kinds of debt.
In addition, the Fed said that the
one-trillion-dollar program created by the central bank and the Treasury
Department to spur consumer and business lending could be expanded to include
other financial assets.
The program, which is rolling out this week,
currently is focused on boosting lending for auto, education, credit cards and
loans for business equipment.
In a statement following a two-day long policymaking
meeting, the Fed said that the U.S. economy continued to contract since last
meeting in January.
"Job losses, declining equity and housing wealth, and
tight credit conditions have weighed on consumer sentiment and spending," it
said.
Weaker sales prospects and difficulties in obtaining
credit have led businesses to cut back on inventories and fixed investment. And
U.S. exports have slumped as a number of major trading partners have also fallen
into recession, said the Fed.
Still, the central bank hopes that its actions and
steps taken by the Obama administration eventually will help revive the economy.
"Although the near-term economic outlook is weak, the
committee anticipates that policy actions to stabilize financial markets and
institutions, together with fiscal and monetary stimulus, will contribute to a
gradual resumption of sustainable economic growth," the Fed said.
The Fed's decision to leave unchanged the key
interest rate, which commercial banks charge each other on overnight loans, was
in line with economists' expectations.
Many economists now predict that the Fed will hold
the bank lending rate, also known as federal funds rate, in this low level for
the rest of this year and for most -- if not all -- of next year.
In its statement, the Fed also said it "anticipates
that economic conditions are likely to warrant exceptionally low levels of the
federal funds rate for an extended period."
Like many private economists, the Fed at present does
not expect inflation to become a problem. "In light of increasing economic slack
here and abroad," it said, "inflation will remain subdued."
Pushed by higher energy prices and apparel costs,
consumer prices in the United States jumped 0.4 percent in February, the biggest
monthly gain since last July, according to the Labor Department on Wednesday.
The 0.4 percent gain followed an increase of 0.3
percent in January and was slightly bigger than the 0.3 percent gain that
analysts had been expecting.
Even so, few economists believe inflation will become
a problem before the economy gets out of the recession, which is in its second
year.
Some economists, however, said that it's mindful of
the risks of pumping more money into the economy, bailout financial institutions
and leaving the key rate at a record low for too long.
Those steps could ignite inflation, put taxpayers'
money in danger and encourage companies to make high-stake gambles, they warned.
Against this backdrop, the Fed pledged in the
statement it will "continue to carefully monitor the size and composition of the
Federal Reserve's balance sheet in light of evolving financial and economic
development."
Wednesday's decision and announcement came three days
after Fed Chairman Ben Bernanke reaffirmed that stabilizing the nation's
financial system is key to turn around the economy.
It that can be done, then the recession might end
this year, setting the stage for a recovery next year, he said in a rare
interview televised by CBS.
Even in this best-case scenario, however, U.S.
unemployment rate, which is now at a 25-year peak of 8.1 percent, will keep
climbing. Some economists think it will hit 10 percent by the end of this year.
And the U.S. economy, the world's largest one, is
still sinking. In the fourth quarter of 2008, it contracted at an annual rate of
6.2 percent, the worst showing in a quarter century.
Economists expect the economy to continue contracting
in the first half of this year, predicting a pace between 5.5 and 6 percent or
more for the first three months.
WASHINGTON, March 17
(Xinhua) -- The U.S. Federal Reserve announced Tuesday it is delaying by two
years new limits on certain securities and other core capital held at major
banks, a fresh effort to help banks cope with the financial crisis.
"This action is being taken in light of continued stress in financial markets
and the efforts of BHCs (bank holding companies)to increase their overall
capital levels," the Fed explained in a statement.
WASHINGTON, March 3 (Xinhua) -- The
U.S. Treasury Department and the Federal Reserve on Tuesday launched a
much-awaited program aimed at boosting the availability of credit for consumers
and small businesses.
The program, dubbed the Term Asset-Backed Securities Loan Facility (TALF),
has the potential to generate up to 1 trillion U.S. dollars of lending for
businesses and households, the Treasury and the Fed said in a joint statement.
WASHINGTON, Feb. 18 (Xinhua) -- U.S. President Barack Obama on Wednesday
revealed a mortgage relief plan in an effort to prevent more Americans from
losing their homes.
The plan is expected to help between 7 million and 9 million American
families to avoid foreclosure, said the president in an address in Mesa,
Arizona.
NEW YORK, Feb. 18 (Xinhua) -- U.S. stocks fluctuated around November lows on
Wednesday morning as the market digest the details of Obama administration's
housing relief plan.
Stocks saw a big sell-off Tuesday with major indexes tumbling to 3-month low.
Dow dropped back to 7,552 level and S&P 500 plunged below 800 points for the
first time since November.
