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Fed: Moderate US recovery at slow pace, no more QE

Fed: Moderate US recovery at slow pace, no more QE
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Policymakers at the US central bank the Federal Reserve have signalled concerns about economic growth there, but will stop printing new money to stimulate the economy by buying back government bonds from investors – so called quantitative easing.

The Fed’s Open Market Committee members under chairman Ben Bernanke, have been accused of sowing the seeds for future inflation with QE.

US interest rates will remain unchanged at a historic low of between zero and a 0.25 percent. Of the major world economies only Japan is lower.

The euro zone is in the process of putting up interest rates because of inflation worries and it is the same story with China.

There was little reaction from Wall Street as the Fed said the economic recovery is moving somewhat more slowly than expected, but it put that down partly to temporary factors including the damping effect of higher food and energy prices on consumer purchasing power and spending.

It also mentioned as disruptions to supply-chains associated with the Japanese earthquake, tsunami and nuclear disaster.

Labour market conditions, the Fed said, have been “weaker than anticipated”.

On inflation it did not seem too worried saying it will subside “as the effects of past energy and other commodity price increases dissipate”.