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US Fed weighs new measures as recovery falters
AFP - Thursday, July 15
WASHINGTON (AFP) - – The Federal Reserve revealed Wednesday it was weighing new measures to keep the faltering US recovery on track, while warning of worse-than-expected unemployment and growth rates this year.
Minutes of the Fed's latest rate-setting meeting -- published on Wednesday -- showed central bankers now expect US growth to slow to 3.0-3.5 percent this year, well down from previous estimates.
Noting that the recovery continued at a "moderate pace," members of the Federal Open Market Committee -- which sets interest rates -- said a worsening outlook should prompt debate over further stimulus.
"The committee would need to consider whether further policy stimulus might become appropriate if the outlook were to worsen appreciably," the minutes said.
The group met June 22-23, amid fears about the impact of a European debt crisis that roiled global financial markets.
They had been seen as locked in a debate over when to reverse policies sparked by the crisis, but any normalization now appears to have been put on hold amid a cloudy economic outlook.
The Fed has shied away from easing historically low interest rates and winding up all of the more than one trillion dollars of liquidity it injected to keep the economy afloat.
Citing a weakened job market, market uncertainty and even the risk of deflation, Fed members warned the recovery would continue to be restrained.
Fed members expected "the pace of the economic recovery to be held back by... household and business uncertainty, persistent weakness in real estate markets, only gradual improvement in labor market conditions, waning fiscal stimulus, and slow easing of credit conditions in the banking sector."
Against this bleak backdrop the Fed raised its end-of-year unemployment forecast to 9.2-9.5 percent, predicting the troubled labor market would recover more slowly than expected.
AFP - Thursday, July 15
WASHINGTON (AFP) - – The Federal Reserve revealed Wednesday it was weighing new measures to keep the faltering US recovery on track, while warning of worse-than-expected unemployment and growth rates this year.
Minutes of the Fed's latest rate-setting meeting -- published on Wednesday -- showed central bankers now expect US growth to slow to 3.0-3.5 percent this year, well down from previous estimates.
Noting that the recovery continued at a "moderate pace," members of the Federal Open Market Committee -- which sets interest rates -- said a worsening outlook should prompt debate over further stimulus.
"The committee would need to consider whether further policy stimulus might become appropriate if the outlook were to worsen appreciably," the minutes said.
The group met June 22-23, amid fears about the impact of a European debt crisis that roiled global financial markets.
They had been seen as locked in a debate over when to reverse policies sparked by the crisis, but any normalization now appears to have been put on hold amid a cloudy economic outlook.
The Fed has shied away from easing historically low interest rates and winding up all of the more than one trillion dollars of liquidity it injected to keep the economy afloat.
Citing a weakened job market, market uncertainty and even the risk of deflation, Fed members warned the recovery would continue to be restrained.
Fed members expected "the pace of the economic recovery to be held back by... household and business uncertainty, persistent weakness in real estate markets, only gradual improvement in labor market conditions, waning fiscal stimulus, and slow easing of credit conditions in the banking sector."
Against this bleak backdrop the Fed raised its end-of-year unemployment forecast to 9.2-9.5 percent, predicting the troubled labor market would recover more slowly than expected.
