WASHINGTON, Dec. 16 (Xinhua) -- The U.S. Federal Reserve said on Wednesday that the U.S. economic activity has continued to "pick up," and it decided to keep a key interest rate unchanged at a record low of between zero to 0.25 percent to prop up the economy.
Information received recently suggested that "economic activity has continued to pick up and that the deterioration in the labor market is abating," the Fed said.
Traders work in their booth on the floor of the New York Stock Exchange Wednesday, Dec. 16, 2009, as the Fed interest rate is announced. The Federal Reserve has decided to hold interest rates at a record low of between zero to 0.25 percent for an "extended period" to keep the recovery going and drive down double-digit unemployment.(Xinhua/Reuters Photo) Photo Gallery>>>
The housing sector has shown "some signs of improvement" over recent months, said the U.S. central bank in a statement following its two-day policy-making meeting in Washington.
Meanwhile, household spending appears to be expanding at a moderate rate, though it remains constrained by a weak labor market, modest income growth, lower housing wealth, and tight credit.
Businesses are still cutting back on fixed investment, though at a slower pace, and remain reluctant to add to payrolls; they continue to make progress in bringing inventory stocks into better alignment with sales, according to the Federal Reserve.
Moreover, "financial market conditions have become more supportive of economic growth," said the statement, but noting that "economic activity is likely to remain weak for a time."
The Fed said it continues to "anticipate that policy actions to stabilize financial markets and institutions, fiscal and monetary stimulus, and market forces will contribute to a strengthening of economic growth and a gradual return to higher levels of resource utilization in a context of price stability."
Although the economy is stabilizing, the Fed believes that the economy will keep a lid on inflation.
"With substantial resource slack likely to continue to dampen cost pressures and with longer-term inflation expectations stable," the Fed "expects that inflation will remain subdued for some time."
Against this backdrop, the Fed decided to hold the key interest rate, or federal funds rate, which commercial banks charge each other for overnight loans, unchanged at a record low of between zero to 0.25 percent.
The decision means that commercial banks' prime lending rate, used to peg rates on home equity loans, certain credit cards and other consumer loans, will stay around 3.25 percent, the lowest rate in decades.
Moreover, the Fed said that the interest rate is likely to remain at the current low level for "an extended period".
The Fed also decided to stay the course on existing programs intended "to provide support to mortgage lending and housing markets and to improve overall conditions in private credit markets."
Traders work in their booth on the floor of the New York Stock Exchange Wednesday, Dec. 16, 2009, as the Fed interest rate is announced. The Federal Reserve has decided to hold interest rates at a record low and pledged to keep them there for an "extended period" to keep the recovery going and drive down double-digit unemployment.(Xinhua/Reuters Photo) Photo Gallery>>>
NEW YORK, Dec. 16 (Xinhua) -- Wall Street advanced Wednesday, boosted by an upbeat reading on consumer inflation and a rebound in home construction.
A Labor Department report showed the core consumer prices, excluding energy and food prices hold steady after rising 10 straight months, easing investors' worry about inflation. Full story
NEW YORK, Dec. 16 (Xinhua) -- Wall Street ended mixed on Wednesday, as the U.S. dollar got a boost from the Federal Reserve's statement saying the deterioration in the labor market is abating.
The dollar picked up after the Fed decided to keep interest rates "exceptionally low" for "an extended period," while noting the economy has shown some signs of improvement. That sparked concerns on when the Fed will change its monetary policy. Full story
WASHINGTON, Dec. 16 (Xinhua) -- The U.S. House of Representatives voted on Wednesday to raise the 12.1-trillion national debt limit by 290 billion U.S. dollars.
House lawmakers approved the small increase in the debt ceiling by a narrow margin of 218-214. Not a single Republican lawmakers voted for the measure. Full story
NEW YORK, Dec. 7 (Xinhua) -- William Dudley, president of the New York Federal Reserve Bank, said on Monday that the U.S. economy is likely to see a moderate growth in 2010.
"The situation is slowly improving. We are having a recovery in terms of output and the pace of job losses has slowed substantially," Dudley said at the Columbia University World Leaders Forum in New York. Full story
