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Fed keeps US interest rates low


Fed keeps US interest rates low


The US Federal Reserve has held interest rates near zero and renewed its pledge to keep the cost of borrowing very low for a long time.

The central bank’s policy makers are seeing some evidence of an uneven recovery with US economic activity strengthening modestly.

In late February Fed Chairman Ben Bernanke said: “Notwithstanding the positive signs, the job market remains quite weak.”

But in its statement with the rates announcement the Fed said the US labour market was “stabilizing,” a view that was more upbeat than at the last meeting in late January, when the policy-setting committee said only that deterioration in the labour market was “abating.”

The central bank also said business spending on equipment and software had risen “significantly,” which was a brighter assessment than the one it gave in late January.

The Federal Reserve is due to take on a greatly expanded role in financial regulation if legislation on regulatory reform gets through the US Congress.

The chairman of the US Senate Banking Committee Christopher Dodd has unveiled a bill that would give the Fed the power to break up banks and other firms that are too big to fail – that is those that could threaten the stability of the financial system if they suffered serious problems.

But the bill faces a tough passage as Republicans are opposed to new regulation for the US financial sector while some Democrats have said it does not go far enough to safeguard the public.

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