The US Federal Reserve has maintained the rate of its asset purchase programme at $85bn (£54bn) a month, but could start scaling it back soon.It also kept interest rates at a record low range of between zero and 0.25%. 

 

Fed chairman Ben Bernanke said if the central bank's forecasts were correct, it could begin slowing asset purchases by the end of 2013 and wind them down completely by the middle of 2014. But he emphasised that the programme was tied to economic conditions. "We have no deterministic or fixed plan," Bernanke told a press conference on June 18 after the Fed's latest two-day monetary policy meeting. The Fed painted a brighter economic outlook, in which it expects the unemployment rate to continue to fall and inflation to edge closer to its longer term target of 2%. 

 

'Threshold, not trigger' 

 

The Fed's asset purchase programme, in which it has been buying $85bn of government bonds a month, aims to lower long-term interest rates to encourage borrowing, spending and investing. Bernanke said that the tapering of the programme was akin to "letting up a bit on the gas pedal" and "not beginning to apply the brakes".

 

He added that interest rates were likely to remain low for some time after asset purchases concluded, and any rate rise was likely to be "far in the future". The Fed has previously said that it would not consider raising rates until the unemployment rate, currently 7.6%, fell to 6.5%. But, Bernanke stressed that this 6.5% level was "a threshold, not a trigger", saying that if unemployment were to fall below it, it would not immediately lead to a rate rise, but merely a consideration of the broader economic outlook. He also noted that inflation had been running below the Fed's 2% longer-run objective, but said that temporary factors were partly the reason for that. 

 

Forecasts 

 

In its latest statement, the Fed noted further improvement in labour market conditions in recent months, and said the downside risks to the jobs market and the economy had "diminished since the Fall". In fresh quarterly projections, the central bank said it expects the US economy to grow between 2.3% and 2.6% in 2013. (BBC)