14 Jul 2011

More money to be pumped into US economy

7:26 am on 14 July 2011

The US Federal Reserve is prepared to pump more money into the US economy if it remains weak.

A second quantitative easing programme (QE2) ended two weeks ago.

Fed chairman Ben Bernanke also told members of Congress that the United States could expect only "moderate" growth over the coming quarters.

He added that the inflation pressures seen in the first half of 2011 were ''transitory'' and should ease.

He cited higher commodity prices and the earthquake in Japan, which led to parts shortages and drove up vehicle prices, as reasons for why inflation picked up.

Mr Bernanke said the Fed expects to keep its ultra-low interest rate policy in place ''for an extended period''.

The US dollar fell further against the euro following Mr Bernanke's comments, with the euro rising more than a cent to $US1.4088.