The US Federal Reserve downgraded its assessment of the US economy on Wednesday, saying growth had slowed, but shied away from launching a fresh round of economic stimulus.
“Economic activity decelerated somewhat over the first half of this year,” the Fed said at the conclusion of a two-day top-level meeting as it left current monetary policy in place.
The interest rate-setting Federal Open Market Committee (FOMC) said it expected “economic growth to remain moderate over coming quarters and then to pick up very gradually.”
“The unemployment rate will decline only slowly,” it said.
The bank also downplayed glimmers of hope that the housing market is starting to rebound, saying: “Despite some further signs of improvement, the housing sector remains depressed.”
However, there was no new action to juice the economy.
Instead, bank policymakers reiterated their pledge to leave interest rates close to zero until the end of 2014 and reaffirmed their readiness to act.
The decision not to pull the trigger on new measures puzzled some analysts and investors.
The Dow Jones Industrial Average fell sharply after the Fed statement was published. It ended the day down 0.3 percent and under the symbolic threshold of 13,000 points.
Ryan Sweet of Moody’s Analytics described the Fed’s decision not to provide more stimulus or extend the timeframe for low rates as “a bit of [a] surprise move.”
“There was a strong case for changing the rate guidance,” he said, adding that “the odds of the Fed launching a third round of quantitative easing in September are lower.”
The Fed vowed to “provide additional accommodation as needed to promote a stronger economic recovery and sustained improvement in labor market conditions in a context of price stability.”
The Fed has kept interest rates at historic lows, between zero and 0.25 percent, since December 2008 and dished out liquidity in a bid to spur recovery from the Great Recession.
With few tools left in the box and the outlook murky, the Fed has been reluctant to embark on a third round of asset purchases, or quantitative easing, dubbed QE3.
Fed chairman Ben Bernanke and his colleagues have preferred to wait and see whether a recent slowdown has been a blip, or a harbinger of worse times ahead.
All eyes will now be on US jobs and unemployment data slated for release today, which could make or break the chances of more stimulus when the Fed meets again next month.
“This is the first time in five years of near-constant easing that I can remember the FOMC doing less than I expected,” said Pierpont Securities chief economist Stephen Stanley. “Instead, the committee put themselves on a state of heightened alert.”
“Clearly, the heightened alert language is meant to send the signal that the FOMC is prepared to do something significant in September unless things get better,” he added.
Once again, Federal Reserve Bank of Richmond president Jeffrey Lacker was the only dissenting voice. He voted against current policy, voicing concern about declaring a time period for low rates.
It was late morning and steam was rising from water tanks atop the colorful, but opaque-windowed, “soapland” sex parlors in a historic Tokyo red-light district. Walking through the narrow streets, camera in hand, was Beniko — a former sex worker who is trying to capture the spirit of the area once known as Yoshiwara through photography. “People often talk about this neighborhood having a ‘bad history,’” said Beniko, who goes by her nickname. “But the truth is that through the years people have lived here, made a life here, sometimes struggled to survive. I want to share that reality.” In its mid-17th to
‘MAKE OR BREAK’: Nvidia shares remain down more than 9 percent, but investors are hoping CEO Jensen Huang’s speech can stave off fears that the sales boom is peaking Shares in Nvidia Corp’s Taiwanese suppliers mostly closed higher yesterday on hopes that the US artificial intelligence (AI) chip designer would showcase next-generation technologies at its annual AI conference slated to open later in the day. The GPU Technology Conference (GTC) in California is to feature developers, engineers, researchers, inventors and information technology professionals, and would focus on AI, computer graphics, data science, machine learning and autonomous machines. The event comes at a make-or-break moment for the firm, as it heads into the next few quarters, with Nvidia CEO Jensen Huang’s (黃仁勳) keynote speech today seen as having the ability to
NEXT GENERATION: The company also showcased automated machines, including a nursing robot called Nurabot, which is to enter service at a Taichung hospital this year Hon Hai Precision Industry Co (鴻海精密) expects server revenue to exceed its iPhone revenue within two years, with the possibility of achieving this goal as early as this year, chairman Young Liu (劉揚偉) said on Tuesday at Nvidia Corp’s annual technology conference in San Jose, California. AI would be the primary focus this year for the company, also known as Foxconn Technology Group (富士康科技集團), as rapidly advancing AI applications are driving up demand for AI servers, Liu said. The production and shipment of Nvidia’s GB200 chips and the anticipated launch of GB300 chips in the second half of the year would propel
The battle for artificial intelligence supremacy hinges on microchips, but the semiconductor sector that produces them has a dirty secret: It is a major source of chemicals linked to cancer and other health problems. Global chip sales surged more than 19 percent to about US$628 billion last year, according to the Semiconductor Industry Association, which forecasts double-digit growth again this year. That is adding urgency to reducing the effects of “forever chemicals” — which are also used to make firefighting foam, nonstick pans, raincoats and other everyday items — as are regulators in the US and Europe who are beginning to
RSS