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Fed sees early signs of end to US recession

The US Federal Reserve said the country’s economy may be “levelling out” as it held interest rates at record lows.

business Updated: Aug 13, 2009 22:27 IST
Agencies

The US Federal Reserve said the country’s economy may be “levelling out” as it held interest rates at record lows.

The Fed delivered a vote of confidence in the economy on Wednesday, saying it would slow the pace of an emergency rescue programme to buy $300 billion worth of Treasury securities and shut it down at the end of October, a month later than previously scheduled.

It also held interest rates steady, with a closely watched bank lending rate near zero, and again pledged to keep them there for “an extended period” to nurture an anticipated recovery.

Fed Chairman Ben Bernanke and his colleagues said the economy appeared to be “levelling out” — a considerable upgrade from their last meeting in June, when the Fed observed only that the economy's contraction was slowing.

“We’re no longer at DEFCON 1,” said Richard Yamarone, economist at Argus Research, referring to the defence term used to indicate being under siege. “The Fed is pulling in some of its life preservers now that the economy is no longer sinking.”

The more optimistic tone lifted Wall Street on Wednesday. The Dow Jones industrials gained about 120 points, or 1.3 percent, to close above 9,360 _ near their highest level since the market bottomed out in early March.