Federal Reserve Chairman Ben Bernanke and his colleagues have decided to continue their policy of a mild easing of the cost of borrowing. They reduced benchmark US interest rates by a quarter-percentage point to 4.25%, repeating their action of last month and following on from September’s surprise half percentage point cut.
With relatively steady job creation and consumer spending in the world’s largest economy, the Fed policy makers feel they can ignore the risk of inflation for now. Instead they are looking to strengthen the US economy and prevent the possibility of a recession.
The Fed met against a backdrop of widespread unease over the slumping US housing market and deepening concern over the exposure of major financial institutions around the world to US mortgage failures.