America’s central bank, the Federal Reserve, has maintained its promise to keep interest rates at rock-bottom levels for ‘an extended period’ even though the US economy is showing stronger signs of recovery.
The Fed’s chairman Ben Bernanke believes that with the unemployment holding steady at an uncomfortable 9.7 per cent, and inflation posing little threat, there is no hurry to tighten monetary policy.
Recently, the world’s biggest economy has been showing signs of emerging from its deepest recession for decades, with house prices and job-hiring on the rise, and more retail spending on the high street.
When the Fed cut interest rates to virtually zero in December 2008, it promised to keep them ‘exceptionally low’ – a pledge reiterated at every policy meeting since.
Now officials say although the recovery is underway, it is shaky and will remain so for some time to come.