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Fed to keep cash rate near zero to rescue US economy

Staff Reporter 1 minute read

The Federal Reserve says it will use all tools available to steer the American economy out of the depths of its current recession including maintaining an exceptionally low cash rate for some time.

In a statement released overnight, the Federal Open Market Committee, said it would keep the target cash rate at zero to one quarter per cent.

Economic conditions would likely warrant exceptionally low levels of the federal funds rate for some time, the Committee conceded.

The Fed would also employ “all available tools to promote the resumption of sustainable economic growth and to preserve price stability” such as continuing to purchase large quantities of agency debt and mortgage-backed securities and the implementation of a loan facility to facilitate credit to both households and small business.

The Committee said it anticipated a gradual recovery in economic activity later in the year “but the downside risks to that outlook are significant”.

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