26 Oct 2012

US central bank sticks to stimulus plan

7:45 pm on 26 October 2012

The US Federal Reserve has stuck to its plan to keep stimulating US economic growth until the job market improves and repeated its vow to keep rates near zero until mid-2015.

Following a two-day meeting, the central bank noted the housing sector was continuing to gather strength and household spending had grown "a bit more quickly."

However, it cautioned that business investment was softening and reiterated a pledge to continue supporting growth even as the recovery picks up.

The Fed's policy-setting panel made no change in its plan to purchase $US40 billion in mortgage-backed debt per month to push interest rates lower and spur a stronger recovery.

The Fed, which has held rates close to zero since December 2008, had already bought $US2.3 trillion in mortgage-related and government debt before launching its latest round of stimulus.

Reuters reports that some analysts have expressed concern the policies could spark inflation, but price increases have remained tame so far - as has economic growth.