The US Federal Reserve has held its interest rates near zero and repeated a promise to keep them exceptionally low for an extended period. After a meeting on monetary policy, the Fed also pointed to increased momentum in the US economy's recovery.
The Fed's nod to a firmer rebound from the deepest recession in decades hints that it is moving closer to dropping its promise to hold borrowing costs at rock bottom levels, suggesting rate hikes could come within several months.
For a second consecutive meeting, Kansas City Federal Reserve Bank President Thomas Hoenig dissented, saying the commitment to keep rates exceptionally low for an extended period was no longer warranted.
The Fed reiterated that it intends to wrap up purchases of mortgage-related assets by the end of March, but would monitor the economic outlook and financial developments to see if more support was necessary.
It said the US labour market was stabilising, a view that was more upbeat than at the last meeting in late January, when the policy-setting committee said only that deterioration in the labour market was 'abating'.
The Fed also said business spending on equipment and software had risen 'significantly', also a brighter assessment than the one it gave in late January.
The Fed has held its key federal funds rate near zero since December 2008 to bolster the economy and help it through the most severe financial crisis in generations. Last March, it committed to holding rates very low for 'an extended period'.
The US economy resumed growth in the second half of last year, and expanded at a robust 5.9% annual pace in the final three months of the year.
The Fed has allowed special lending facilities to close as financial markets have returned to normal after the crisis, and it recently raised the discount rate it charges banks for emergency loans to 0.75% from 0.5%. Fed officials stressed the move was in keeping with the settling of financial markets and was not a precursor to efforts to tighten lending conditions.
