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Markets Bounce as Reserve Undertakes to Keep US Federal Funds Rates Down

A “slower than expected” growth rate in the United States economy has led the US Federal Reserve to maintain federal funds rates at historically low levels, and continue to do so into mid-2013.

It said in a statement:

“To promote the ongoing economic recovery and to help ensure that inflation, over time, is at levels consistent with its mandate, the Committee decided today to keep the target range for the federal funds rate at 0 to ¼ per cent.  The Committee currently anticipates that economic conditions – including low rates of resource utilization and a subdued outlook for inflation over the medium run – are likely to warrant exceptionally low levels for the federal funds rate at least through mid-2013.  The Committee also will maintain its existing policy of reinvesting principal payments from its securities holdings.  The Committee will regularly review the size and composition of its securities holdings and is prepared to adjust those holdings as appropriate.”

On Tuesday 9th August 2011, the US markets responded to the news with a bounce of nearly 4% in the Dow Jones Industrial Average by close of business and the NYSE Composite Index was up 5.25%.

About Business Desk

Business Desk
Editors and staff from the Business Desk at The Global Herald.

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