Federal Reserve reaffirms commitment to Operation Twist

The US Federal Reserve has opted to keep interest rates at record lows and pledged to continue with Operation Twist.

Ben Bernanke
Ben Bernanke

The Federal Open Market Committee, led by Ben Bernanke, chairman of the Federal Reserve, announced yesterday that the country had seen moderate economic growth since November, despite the global slowdown.

However, the committee acknowledged that unemployment remains high and fixed business investment is still growing more slowly than household spending.

The unemployment rate dropped to 8.6% in November, representing the lowest levels since March 2009.

Overall labour market conditions are said to have improved while household spending has advanced. Inflation has begun to moderate, as CPI dropped by 0.1% in October to 3.5%, and the committee predicts further declines over the coming quarters.

In order to keep inflation at “levels consistent with the dual mandate”, while promoting a stronger economic recovery, the committee pledged to continue with the $400 billion (£258 billion) Operation Twist programme announced in September.

The committee also stated that it would continue with the current policy of record-low interest rates of between 0% and 0.25%, at least through to mid-2013.

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