US Federal Reserve to continue with quantitative easing plan

2 May 2013

The US Federal Reserve has decided to carry on with its bond buying scheme - which it spends $85 billion a month on - in an attempt to boost the economy by keeping borrowing costs down.

High unemployment was cited as a key reason for a lack of change in its quantitative easing policy.

The central bank also confirmed its interest rate at no higher than 0.25 per cent.

Despite a rebound in the first quarter, which saw the US economy grow by 2.5 per cent, expectations were not met, meaning the central bank has little room to move.

The Federal Reserve buys bonds to increase the money supply and improve liquidity in the financial system and it is hoped this quantitative easing will spark economic growth and boost employment rates.

In a statement given on Wednesday (1 May) the Treasury Borrowing Advisory Committee said: "Expectations for tapering off of the Fed's outcome-based purchases have been pushed back due to recent softening in the economic data."

By Gary Cooper

Become a bobsguide member to access the following

1. Unrestricted access to bobsguide
2. Send a proposal request
3. Insights delivered daily to your inbox
4. Career development