Fed waits for recovery to firm

The US central bank has repeated its pledge to hold interest rates ultra low for “an extended period” to help the still fragile recovery of the world’s largest economy.

Federal Reserve Chairman Ben Bernanke and his policymakers have some cause for optimism but are also cautious in the face of extremely weak jobs and housing market reports.

On the plus side, Beijing’s decision to let its currency rise against the dollar should boost US exports to China.

However, consumer and business spending remain lacklustre and some analysts have questioned whether US economic activity is ‘strengthening’ as much as the Fed has said.

Most economists still expect the central bank’s next move to be an interest rate increase, although not until next year and possibly not until 2012.

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