Wednesday, August 1, 2012

Federal Reserve downgrades US economy assessment

A pressman checks uncut sheets of $20 bills on July 12, 2012, at the US Bureau of Engraving (BEP) in Washington, DC

Source: Press TV

The US Federal Reserve has downgraded its assessment of the country’s economy, saying the economic growth has slowed and US economy is losing strength.

"Economic activity decelerated somewhat over the first half of this year," the Federal Reserve announced after a two-day top-level meeting on Wednesday.

The interest rate-setting Federal Open Market Committee (FOMC) also said that it expected "economic growth to remain moderate over coming quarters and then to pick up very gradually."

"The unemployment rate will decline only slowly," it added.

The bank also downplayed glimmers of hope that the housing market is starting to rebound, saying "despite some further signs of improvement, the housing sector remains depressed."

Despite the disappointing news, no measures have been taken by government officials so far, and the Federal Reserve shied away from launching a fresh economic stimulus package.

Ryan Sweet of Moody's Analytics described the Fed's decision not to provide more stimulus or extend the timeframe for low rates as "a bit of (a) surprise move."

"There was a strong case for changing the rate guidance," he said, adding that "the odds of the Fed launching a third round of quantitative easing in September are lower."

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