News / Economy

US Central Bank to Hold Interest Rates Low

A television screen at the post of specialist Stephen Ruiz, left, displays the decision of the Federal Reserve, on the floor of the New York Stock Exchange Tuesday, Aug. 9, 2011.
A television screen at the post of specialist Stephen Ruiz, left, displays the decision of the Federal Reserve, on the floor of the New York Stock Exchange Tuesday, Aug. 9, 2011.

Multimedia

Michael Bowman

The U.S. central bank says America’s economic recovery has slowed, and that near-zero interest rates are expected to remain in place for another year. The statement from Federal Reserve policymakers came after a U.S. credit rating downgrade and significant losses on global financial markets.

If nervous investors were looking for swift, aggressive action from the Federal Reserve in response to the U.S. credit rating downgrade, lagging economic growth, and upheaval in financial markets, Tuesday’s meeting of Fed policymakers gave them little to cheer about.

With interest rates already at historic lows, the U.S. central bank announced no interest rate or policy changes, nor any new rounds of monetary infusions. That, despite noting what the Fed termed heightened “downside” risks to an economic recovery that many economists believe is stalling.

Even so, the Federal Reserve did not rule out future action, saying its Open Market Committee discussed a “range of policy tools available to promote a stronger economic recovery.”

Bank of New York Mellon global financial strategist Jack Malvey said, “I think they [Federal Reserve officials] would prefer to see the markets try and reach equilibrium on their own," said Malvey. "This [market upheaval] really is not [a repeat of the financial crisis of] 2008. This is a response to an overload of negative factors over the course of the last couple of weeks. And it does provide some basis for optimism and not-too-distant [market] stabilization.”

Malvey appeared on Bloomberg Television. He said market fears of another recession in the United States have eclipsed those stemming from Standard & Poor’s downgrade of U.S. creditworthiness. “The chances of a recession in the U.S. are probably up in the 50-percent category [range]. In many respects, the [S&P] downgrade was no big deal. It was in recognition of what was fairly obvious over the last year, that the U.S. fiscal position is not as strong as it had been," he said.

A slowing U.S. economy will exacerbate America’s fiscal imbalances. Yet a $1.5 trillion deficit gives the federal government little room to stimulate growth. Given these realities, the Obama administration is advocating short-term measures to spur job growth and consumer activity while also urging long-term efforts to cut the deficit and slow the growth of the national debt.

Gene Sperling, who heads President Barack Obama’s National Economic Council, also appeared on Bloomberg Television. “We need to do both the short-term and the long-term. And the best thing we can have is that we are willing to take aggressive bipartisan action on job growth in the short-term, in the same context in which we are also signaling that we are going to get control of our long-term fiscal situation," he said.

Sperling said the administration wants to see an extension of a temporary cut in taxes paid by workers to fund Social Security, thereby giving wage earners higher take-home pay. Monday, President Obama renewed his call for a bipartisan formula to reduce America’s debt burden. Washington’s lack of progress in confronting America’s fiscal challenges was listed as a primary factor in Standard & Poor’s decision to cut the U.S. credit rating last week.

Related story by VOA's Mil Arcega

You May Like

Anti-Terror Drills Highlight China’s Push Into Central Asia

China, Russia, several central Asian countries wrap up massive anti terrorism military drills in Inner Mongolia More

Erdogan’s First Step: Secure More Power in New Role in Turkey

Erdogan was sworn in as Turkey's first popularly elected president on Thursday; he picked former foreign minister Ahmet Davutoglu as PM More

Pakistan Army Fails to Break Political Deadlock

PM Sharif claims he didn't ask army to defuse crisis; military rejects claim More

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Ukraine Battles Pro-Russia Rebel Assaulti
X
Daniel Schearf
August 29, 2014 9:30 PM
After NATO concluded an emergency meeting to discuss the crisis in eastern Ukraine, the country is struggling to contain heavy fighting near the strategic port of Mariupol, on the Azov Sea. Separatist rebels are trying to capture the city, allegedly with Russian military help, and Ukraine's defense forces are digging in. VOA's Daniel Schearf spoke with analysts about what lies ahead for Ukraine.
Video

Video Ukraine Battles Pro-Russia Rebel Assault

After NATO concluded an emergency meeting to discuss the crisis in eastern Ukraine, the country is struggling to contain heavy fighting near the strategic port of Mariupol, on the Azov Sea. Separatist rebels are trying to capture the city, allegedly with Russian military help, and Ukraine's defense forces are digging in. VOA's Daniel Schearf spoke with analysts about what lies ahead for Ukraine.
Video

Video Growing Business Offers Paint with a Twist of Wine

Two New Orleans area women started a small business seven years ago with one thing in mind: to help their neighbors relieve the stress of coping with a hurricane's aftermath. Today their business, which pairs painting and a little bit of wine, has become one of the fastest growing franchises across the U.S. VOA’s June Soh met the entrepreneurs at their newest franchise location in the Washington suburbs.
Video

Video Ebola Vaccine Trials To Begin Next Week

The National Institutes of Health says it is launching early stage trials of a vaccine to prevent the Ebola virus, which has infected or killed thousands of people across West Africa. The World Health Organization says Ebola could infect more than 20,000 people across the region by the time the outbreak is over. The epidemic has health experts and governments scrambling to prevent more people from becoming infected. Zlatica Hoke has more.
Video

Video Asian Bacteria Threatens Florida Orange Trees

Florida's citrus fruit industry is facing a serious threat from a bacteria carried by the Asian insect called psyllid. The widespread infestation again highlights the danger of transferring non-native species to American soil. VOA’s George Putic reports.
Video

Video Aging Will Reduce Economic Growth Worldwide in Coming Decades

The world is getting older, fast. And as more people retire each year, fewer working-age people will be there to replace them. Bond rating agency Moody’s says that will lead to a decline in household savings; reducing global investments - which in turn, will lead to slower economic growth around the world. But experts say it’s not too late to mitigate the economic impact of the world’s aging populations. Mil Arcega has more.
Video

Video Is West Doing Enough to Tackle Islamic State?

U.S. President Barack Obama has ruled out sending ground troops to Iraq to fight militants of the so-called Islamic State, or ISIS, despite officials in Washington describing the extremist group as the biggest threat the United States has faced in years. Henry Ridgwell reports from London on the growing uncertainty over whether the West’s response to ISIS will be enough to defeat the terrorist threat.
Video

Video Coalition to Fight Islamic State Could Reward Assad

The United States along with European and Mideast allies are considering a broader assault against Islamic State fighters who have spread from Syria into Iraq and risk further destabilizing an already troubled region. But as VOA State Department Correspondent Scott Stearns reports, confronting those militants could end up helping the embattled Syrian President Bashar al-Assad.
Video

Video Made in America Socks Get Toehold in Online Fashion Market

Three young entrepreneurs are hoping to revolutionize the high-end sock industry by introducing all-American creations of their own. And they’re doing most of it the old-fashioned way. VOA’s Julie Taboh recently caught up with them to learn what goes into making their one-of-a-kind socks.
Video

Video Americans, Ex-Pats Send Relief Supplies to West Africa

Health organizations from around the world are sending supplies and specialists to the West African countries that are dealing with the worst Ebola outbreak in history. On a smaller scale, ordinary Americans and African expatriates living in the United States are doing the same. VOA's Carol Pearson reports.
Video

Video America's Most Popular Artworks Displayed in Public Places

Public places in cities across America were turned into open-air art galleries in August. Pictures of the nation’s most popular artworks were displayed on billboards, bus shelters, subway platforms and more. The idea behind “Art Everywhere,” a collaborative campaign by five major museums is to allow more people to enjoy art and learn about the country’s culture and history. Faiza Elmasry has more.
Video

Video Chinese Doctors Use 3-D Spinal Implant

A Chinese boy suffering from a debilitating bone disease has become the first patient with a part of his spine created in a three-dimensional printer. Doctors say he will soon regain normal mobility. VOA’s George Putic reports.
Video

Video India’s Leprosy Battle Stymied by Continuing Stigma

Medical advancements in the treatment of leprosy have greatly diminished its impact around the world, largely eliminating the disease from most countries. India made great strides in combating leprosy, but still accounts for a majority of the world’s new cases each year, and the number of newly infected Indians is rising - more than 130,000 recorded last year. Doctors there say the problem has more to do with society than science. Shaikh Azizur Rahman reports from Kolkata.

AppleAndroid

World Currencies

EUR
USD
0.7537
JPY
USD
103.79
GBP
USD
0.6032
CAD
USD
1.0957
INR
USD
60.522

Rates may not be current.