US Federal Reserve retains bond-buying initiative

1 August 2013

The US Federal Reserve has maintained its current bond-buying scheme and stated it expects the US economy to grow in the coming months.

It said it would hold the key rate of interest at near zero and will keep buying $85 billion in bonds each month to help lower long-term interest rates.

This news will help the financial markets as many institutions have been debating whether or not the central bank will continue with its plans. With this knowledge, banks can now make proper plans of their own.

Official figures have shown the US economic growth for the second quarter of 2013 had been more than expected.

The Commerce Department said the US economy grew at an annualised rate of 1.7 per cent in the quarter, up from a revised 1.1 per cent in the first three months of the year.

Lower long-term interest rates may encourage consumers and businesses to take out loans from banks in the US.

By Claire Archer

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