The US Federal Reserve held benchmark rates near zero on Tuesday and renewed a promise to keep them exceptionally low for an extended period while pointing to increased momentum in the economy's recovery.
The central bank's nod to a firmer rebound from the deepest recession in decades hints that it is moving closer to dropping its promise to hold borrowing costs at rock bottom levels, suggesting rate hikes could come within several months.
For a second consecutive meeting, Kansas City Federal Reserve Bank President Thomas Hoenig dissented, saying the commitment to keep rates exceptionally low for an extended period was no longer warranted.
The central bank reiterated that it intends to wrap up purchases of mortgage-related assets by the end of March, but would monitor the economic outlook and financial developments to see if more support is necessary.
The Fed said the labour market was "stabilizing," a view that was more upbeat than at the last meeting in late January, when the policy-setting committee said only that deterioration in the labour market was "abating."
The US Federal Reserve held benchmark rates near zero on Tuesday and renewed a promise to keep them exceptionally low for an extended period while pointing to increased momentum in the economy's recovery.
The central bank's nod to a firmer rebound from the deepest recession in decades hints that it is moving closer to dropping its promise to hold borrowing costs at rock bottom levels, suggesting rate hikes could come within several months.
For a second consecutive meeting, Kansas City Federal Reserve Bank President Thomas Hoenig dissented, saying the commitment to keep rates exceptionally low for an extended period was no longer warranted.
The central bank reiterated that it intends to wrap up purchases of mortgage-related assets by the end of March, but would monitor the economic outlook and financial developments to see if more support is necessary.
The Fed said the labour market was "stabilizing," a view that was more upbeat than at the last meeting in late January, when the policy-setting committee said only that deterioration in the labour market was "abating."
The central bank also said business spending on equipment and software had risen "significantly," also a brighter assessment than the one it gave in late January.
The Fed has held the benchmark federal funds rate near zero since December 2008 to bolster the economy and help it through the most severe financial crisis in generations. Last March, it committed to holding rates very low for "an extended period."
Source :http://www.moneycontrol.com/news/world-news/fed-holds-rates-extended-period-vow-steady_447092.html
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