US Federal Reserve officials see a recovery from recession underway but say it will be 'restrained' by high unemployment and difficult credit conditions. This is according to minutes of their September 22-23 meeting which were released last night.
The minutes showed continuing worries about unemployment despite an apparent pick-up in economic activity.
A Fed staff projection used by policymakers showed some larger gains in employment than previously forecast, but unemployment staying as high as 9.25% by the end of 2010 and then falling to about 8% by the end of 2011.
The minutes indicated that participants 'agreed that the incoming data and information received from business contacts suggested that economic activity had picked up following its severe downturn'.
Many Fed officials had revised up their projections for economic activity in the second half of 2009 and beyond, on the basis of data showing steadying housing and consumer spending as well as other factors.
'Despite these positive factors, many participants noted that the economic recovery was likely to be quite restrained,' the minutes showed. 'Credit from banks remained difficult to obtain and costly for many borrowers; these conditions were expected to improve only gradually.'
The report noted that some of the upturn in the US economy 'probably reflected government policy support,' and that Fed officials expressed 'considerable uncertainty' about the likely strength of the upturn once those were withdrawn.
The Fed panel voted unanimously at the meeting to maintain the federal funds rate of zero to 0.25% in place since last December to help jolt the economy out of its worst recession in decades.
