Fed chairman Ben Bernanke gave his first post-FOMC meeting press conference on Wednesday. Reuters reports:
Federal Reserve Chairman Ben Bernanke signaled on Wednesday that the U.S. central bank is in no rush to scale back its support for the economy with the labor market still in a "very, very deep hole."
The Fed trimmed its forecast for 2011 economic growth in a nod to a weak start to the year and bumped up its projections for inflation, which caused some jitters in financial markets.
The central bank's policy-setting committee said after a two-day meeting it will complete the purchase of $600 billion in bonds in June to support the economy's recovery, and said it would keep its balance sheet, currently at $2.67 trillion, steady for a time to ensure its support does not fade.
It also repeated it plans to keep overnight interest rates, which it has held near zero since December 2008, extraordinarily low for "an extended period."
While the Fed reduced its growth forecast for the US economy, data out on Wednesday suggested that growth will remain strong in coming months. From Bloomberg:
Demand for U.S. durable goods rose in March for a third consecutive month, indicating business investment will pick up.
Bookings for equipment meant to last at least three years climbed 2.5 percent after a 0.7 percent gain the prior month that reversed a previously reported drop, the Commerce Department said today in Washington. The increase reflected growing demand for machinery, computers and automobiles.
Industrial new orders also increased in the euro area in February. Eurostat reports:
In February 2011 compared with January 2011, the euro area (EA17) industrial new orders index rose by 0.9%. In January the index grew by 1.2%. In the EU27, new orders increased by 1.2% in February 2011, after a rise of 0.5% in January. Excluding ships, railway & aerospace equipment, for which changes tend to be more volatile, industrial new orders increased by 0.6% in the euro area and by 0.3% in the EU27.
Meanwhile, the UK economy rebounded in the first quarter of the year. Reuters reports:
Britain's economy made only a sluggish start to 2011 as it crawled back from a slump at the end of last year, snuffing out chances of a Bank of England rate rise next week and hampering the government's austerity drive...
Overall output expanded 0.5 percent in the first three months of the year after declining by the same amount at the end of 2010 as construction posted its biggest drop since the height of Britain's worst recession since World War Two.
The UK economy may struggle to regain momentum though. Again from Reuters:
Consumer morale unexpectedly deteriorated in April to its gloomiest since the country was in the depths of recession, as people braced to take a hit from public spending cuts, a survey showed on Thursday.
The GfK NOP consumer confidence index fell to -31 in April from -28 in March, its lowest reading since February 2009, and confounding analysts' expectations for a steady reading.
It is Japan, though, that faces the bigger struggle. AFP/CNA reports a plunge in retail sales in March.
Japanese retail sales recorded their steepest drop in 13 years in March, the government said Wednesday as last month's massive earthquake and tsunami dampened consumer sentiment.
Retail store sales in March tumbled 8.5 per cent from a year earlier, reversing a 0.1 per cent gain in February, the ministry of economy, trade and industry said.
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