US Federal Reserve sticks to stimulus
Washington: Observing that America's economic growth has generally been proceeding at a moderate pace with continued albeit somewhat uneven improvement in labour market conditions, a top Obama Administration official has said the US would continue buying bonds at USD 85 billion monthly pace.
"Our total purchases of longer-term securities were maintained at USD 85 billion per month, in addition to the reinvestment or rolling over of maturing securities on our balance sheet. The committee agreed today to continue asset purchases at that rate, subject to the same conditions that we laid out a year ago," Federal Reserve Board Chairman Ben Bernanke told reporters at a news conference here yesterday.
At the conclusion of the Federal Open Market Committee, Bernanke said economic growth has generally been proceeding at a moderate pace with continued albeit somewhat uneven improvement in labour market conditions.
"Of course, to say that the job market has improved does not imply that current conditions are satisfactory. Notably, at 7.3 per cent, the unemployment rate remains well above acceptable level.
"Long-term unemployment and underemployment remain high, and we have seen ongoing declines in labour force participation, which actually reflects discouragement on the part of many potential workers as well as longer-term influences, such as the ageing of the population," he said.
In the committee's assessment, he said, the downside risks to growth have diminished on net over the past year, reflecting among other factors somewhat better economic and financial conditions in Europe and increased confidence on the part of households and firms in the staying power of the US recovery.
However, the tightening of financial conditions observed in recent months, if sustained, could slow the pace of improvement in the economy and labour market. In addition, federal fiscal policy continues to be an important restraint on growth and a source of downside risk, he said.
Responding to questions, Bernanke said his?intention is to try to set policy as appropriate for the economy.
"We are somewhat concerned. I won't overstate it, but we do want to see the effects of higher interest rates on the economy, particularly mortgage rates, on housing," he said.
Bernanke argued that stimulus has been effective, saying "My own assessment is that it has been effective."