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US Central Bank Decides Against New Economic Stimulus

  • VOA News

People use computers to look for work at WorkForce One in Hollywood, Florida, August 1, 2012.

People use computers to look for work at WorkForce One in Hollywood, Florida, August 1, 2012.

The U.S. Central Bank says the American economy slowed in the first half of the year, but has decided against any immediate policy changes.

After a two-day meeting, Federal Reserve policy makers said they will "closely monitor" the country's economic performance in the coming weeks and will adopt new stimulus measures if they conclude they are needed.

For the moment, however, central bank policy chiefs decided an additional spark was not needed. The American economy is still growing, but only at an anemic 1.5 percent pace in the April-to-June period, while the U.S. jobless rate has remained above 8 percent for 41 straight months.

The central bank concluded that the country's economic growth is likely to "remain moderate" over the next several quarters and that the unemployment rate will "decline only slowly."

The state of the U.S. economy is the central issue in the American presidential election campaign, as a one-time venture capitalist, Republican Mitt Romney, attempts to oust President Barack Obama, a Democrat. The government's monthly unemployment and job growth report has been a key focal point, with the report for July due out Friday. By the time the Federal Reserve policy makers meet again in mid-September, they also will have the August report.

The central bank said business investment has grown, but consumer spending has slackened from earlier in the year. It said the country's housing industry "remains depressed," while inflation has declined, mostly because crude oil and gasoline prices have dropped. As before, the Federal Reserve said it would keep its benchmark interest rate at zero to one-quarter of a percent through the end of 2014.

Meanwhile, at a re-election campaign rally in the key battleground state of Ohio, Obama acknowledged the economic difficulties Americans have faced in the country's worst downturn since the 1930s.

"Our first order of business is to recover all the jobs and wealth that was lost in the crisis, and we've made strides these last three and a half years to get that done," said the president. "But, beyond that, we're here to reclaim the financial security that's been slipping away for more than a decade. The decade before I came into office your incomes and wages generally weren't going up. Jobs were moving overseas. Auto industry had been getting hammered. So our job is not just to put people back to work, it's also to build an economy where over the long haul that work pays off, so that no matter who you are, or what you look like, or where you come from, here in America you can make it if you try."

Romney has made the U.S. economic struggles the centerpiece of his campaign. He said Obama's policies have failed. Romney has contended that lower taxes and less government regulation would boost the economy and create jobs at a faster pace.

On Thursday, policy chiefs at the European Central Bank are to consider new ways to attack the 17-nation euro currency zone's persistent governmental debt crisis, now in its third year. The central bank could opt to directly buy Spanish and Italian government bonds as a way to ease their borrowing costs.

Some information for this report was provided by AP, AFP and Reuters.