WASHINGTON: The Federal Reserve said it will pump fresh stimulus if necessary into the weakening economic expansion to boost growth and reduce an unemployment rate that’s been stuck at 8% or higher for more than three years.
The Federal Open Market Committee “will provide additional accommodation as needed to promote a stronger economic recovery and sustained improvement in labor market conditions in a context of price stability,” it said today in a statement at the end of a two-day meeting in Washington. “Economic activity decelerated somewhat over the first half of this year.”
Stocks fell on disappointment Fed Chairman Ben S. Bernanke refrained from taking action even as consumer spending flagged, job growth slackened and manufacturing cooled. Before its next meeting Sept. 12-13, the FOMC will assess unemployment reports for July and August, and the European Central Bank may take steps to ease Europe’s debt crisis at a meeting tomorrow.
“They were as blunt as you can get without actually pulling the trigger,” said Dan Greenhaus, chief global strategist at BTIG LLC in New York. “They’re saying, ‘Hey, things are not good and we’re an inch away from easing.’”
The Standard & Poor’s 500 Index (SPX) erased gains after the statement, falling 0.3% to 1,375.32. The yield on the 10- year Treasury note rose to 1.52 percent from 1.47 percent yesterday. Gold futures for December delivery slid 0.7% to US$1,603.10 an ounce in electronic trading at 4:47 p.m. in New York. The dollar rallied 0.7 percent to US$1.2226 per euro. (Bloomberg/tw)