Fed keeps door open to more Q.E. stimulus
Central bank to maintain loose policy until job market lifts but could ramp up - or wind down - bond buying if necessary
The Federal Reserve kept its easy-money policies but left the door open to step up bond purchases if the economy slowed under the government's severe "sequester" spending cuts.
The central bank's policy board, the Federal Open Market Committee, said on Wednesday after a two-day meeting that the economy continued to grow at a "moderate" pace. But it also said that growth was restrained by the government's tighter fiscal policy, which imposed tax rises in January and across-the-board spending cuts in March.
The Fed suggested, in a change from previous statements, that it would keep open the option of more stimulus - larger bond purchases - if the economy slows.
As widely expected, the committee held its key interest rate at zero to 0.25 per cent.
And the Fed policymakers also stuck to their US$85 billion a month bond-buying programme, known as quantitative easing (QE), to keep downward pressure on longer-term interest rates, support mortgage markets and ease credit.
The committee again said that it would maintain its ultra-loose policy until the outlook for the job market improved "substantially" in a context of price stability. With the unemployment rate at 7.6 per cent amid lacklustre 2.5 per cent growth, it was unlikely the jobless rate would fall below the central bank's 6.5 per cent threshold for considering tapering off its stimulus any time soon.
