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Fed leaves policy unchanged, flags up risks

Fed leaves policy unchanged, flags up risks
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The Federal Reserve has held off from fresh stimulus measures for the US economy at its final policy-setting meeting of the year, but warned turbulence in the financial markets threatens economic growth.

Ben Bernanke and his colleagues said the US economy is expanding moderately despite an apparent slowing in global growth.

The Fed left interest rates unchanged. It has little manoeuvring room. Of the world’s leading economies only Japan has lower borrowing costs

Britain’s benchmark rate is 0.5 percent and the European Central Bank just cut its to 1.0 percent.

The latest US jobs numbers were encouraging with the employment rate tumbled in November, but some economists think that may have been an anomaly.

Consumers did appear to be entering the holiday shopping season in more of a spending mood.

However, a report on November’s retail sales in the US was released as the Fed met and was surprisingly soft.

Indicating how firms are having to slash prices to keep the tills ringing, major electronics retailer Best Buy reported a drop in profits from steep discounts.

Many analysts expect the Fed could launch new initiatives at its two-day meeting on January 24-25.

At that time officials are scheduled to release projections for GDP growth, unemployment and inflation, and Fed Chairman Ben Bernanke will hold a quarterly news conference, which he could use to explain any changes.

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