The Federal Reserve has delivered its strongest hint yet that it will unleash a fresh round of “stimulus” to help the flagging US economy
by Richard Blackden, The Telegraph:
In a surprisingly strong signal, many of the rate setters at the Fed have decided that further stimulus is needed “fairly soon”, according to the minutes of their meeting this month.
Many of those on the Federal Open Market Committee (FOMC) – the equivalent of the Bank of England’s Monetary Policy Committee – also judged that more quantitative easing could offer “additional support” for the economy.
Economists said the minutes showed that after a summer watching the recovery lose momentum, top officials at the central bank have decided that the potential benefits of further action outweigh the risk of fueling inflation.
After an encouraging first quarter of the year, the world’s biggest economy expanded at an annual pace of just 1.5pc in the second as employment growth weakened and consumers retrenched. With Europe’s debt crisis far from over, and the US presidential election a matter of weeks away, few private forecasters expect growth to pick up in the second half of the year.
The Congressional Budget Office warned today that the US could plunge back into recession if a series of tax increases and spending cuts are allowed to take effect at the start of the year.