The Federal Reserve has held interest rates near zero while also highlighting increased momentum in the US economy’s recovery, during its latest meeting on monetary policy.
The Fed’s nod to a firmer rebound from the deepest recession in decades hints that it is moving closer to dropping its promise to hold borrowing costs at rock bottom levels, suggesting rate hikes could come within several months.
Kansas City Federal Reserve Bank President Thomas Hoenig said the commitment to keep rates exceptionally low for an extended period was no longer warranted.
It said the US labour market was stabilising, which is a view that is more upbeat than at the last meeting in late January, when the policy-setting committee said only that deterioration in the labour market was ‘abating’.
The Fed also said business spending on equipment and software had risen ‘significantly’. Again, this is a brighter assessment than the one it gave in late January.
The US economy resumed growth in the second half of last year, and expanded at a robust 5.9% annual pace in the final three months of the year.
The Fed has allowed special lending facilities to close as financial markets have returned to normal after the crisis, and it recently raised the discount rate it charges banks for emergency loans to 0.75% from 0.5%. Fed officials stressed the move was in keeping with the settling of financial markets and was not a precursor to efforts to tighten lending conditions.
Equity Interface is an online real estate investment service designed to connect developers and accredited investors. By offering unparalleled research tools and information, Equity Interface empowers members to discover mutually beneficial real estate opportunities. For more information, please visit www.equityinterface.com
