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No hint of stimulus pullback in the US even as growth improves


No hint of stimulus pullback in the US even as growth improves


The US Federal Reserve is to keep its stimulus programme unchanged, that is printing money to buy $85 billion worth of bonds each month.

At their monthly meeting, Fed Chairman Ben Bernanke and the other policymakers concluded the US economy continues to recover but is still in need of support.

They offering no indication that a reduction in the pace of the bond-buying programme is imminent.

They also voiced concerns about higher mortgage rates and the risks of inflation falling too far below the Fed’s target.

The financial markets expect the wind-down process could begin in September and have been told by Bernanke that the bond buying might end entirely by the middle of next year, if the economy progressed as expected.

As the Fed officials met we learned that US economic growth unexpectedly accelerated in the Spring.

Between April and June there was a rebound in business spending and export growth while government spending cuts eased.

Changes in the way GDP is calculated meant growth last year was stronger than previously thought at 2.8 percent rather than 2.2 percent.

The spring of this year saw annual growth of 1.7 percent, but the January to March period was revised down from the previous estimate of 1.8 percent to 1.1 percent.

Consumer spending, which accounts for more than two-thirds of US economic activity, did slow from the pace it reached in the first quarter, but remained strong despite higher taxes.

And the rate of savings increased which, with an improving labour market and rising home prices, should help to spur consumer spending in the second half of the year.

As the GDP data was released, a separate report showed private employers in the US maintained a higher pace of hiring in July, adding to the brightening economic picture.

The government compiled jobless rate stood at 7.6 percent in June, and economists expect a report on Friday to show it ticked down to 7.5 percent in July.

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