US Fed leaves rates untouched, no new action to spur growth

The Fed's policymaking board declined during the two-day meeting that ended yesterday to take any new action to spur  growth, leaving ultra-low 0-0.25 per cent interest rates intact.

The leaders of the central bank seem to be reconciling to a view they had resisted: that the economy, weighed down by consumer debt and a depressed housing market, is not likely to be back on tracks soon.

The pace of economic growth the officials expected in 2012 was not high enough to put Americans back to work in large numbers and according to fed chairman Ben Bernanke the problems in the housing market were more severe and stubborn than what analysts had thought.
 
''Evidently . . . the drags on the recovery were stronger than we thought,'' he told reporters at a news conference.

Economic growth perked up in the July-through-September months, to a 2.5 per cent annual rate of growth, however that was not very fast for an economy with 9.1 per cent unemployment, and both Bernanke and private analysts attributed the growth pickup largely to a reversal of the high fuel prices and other disruptions that acted as a drag on growth earlier in the year.

With their decision not to take any new steps to invigorate the economy, the Fed's policy committee noted that growth had ''strengthened somewhat'' in recent months. At its last meeting, in September, the Fed took action to try to lower longer-term interest rates and encourage growth.

Government policy largely appeared to be on hold, leaving little prospects for a deeply divided Congress to initiate steps for encouraging job creation.