US Federal Reserve says recession is ‘easing’
The US central bank warned, however, that economic activity is likely to remain “weak for a time” because of job losses and increased energy costs.
The bank’s Federal Open Markets Committee (FOMC) voted unanimously to keep its base Federal Funds interest rate at 0-0.25pc, as had been widely expected by Wall Street economists.
The Fed said it believes that “inflation will remain subdued for some time”, however, in part because rising energy costs will be dampened by “substantial resource slack”.
The accompanying statement, which followed a two-day meeting of the FOMC, also reiterated the Fed’s commitment to buying up to $1.45 trillion (£883bn) of agency mortgage-backed securities and debt as well as up to $300bn of US Treasury bonds.
Fresh data considered by the Fed over the two days included a 1.8pc rise in durable goods orders in May, and a levelling of new home sales in spite of a 0.6pc slip in May.
“The intent was to curb market speculation over rate hikes,” said Michael Woolfolk, of the Bank of New York Mellon, adding that while the statement was more subtle than many had hoped for, it “nonetheless delivered a clear message that inflation and the economy will remain subdued for some time”.
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