Thursday, 26 April 2012
U.S. confident of deal with the issue of unemployment
U.S. Federal RESERVES (U.S.) yesterday said the economy will start to enjoy increased with a decrease in unemployment rate by the end of this year following the implementation of the current stimulus policies although there is still uncertainty in the short term.
By stating that 'it is too early to declare victory, chairman, Ben Bernanke said the positive outlook on the world's largest economy and at the same time realizing the increasing demand for stimulus spending.
After a two-day meeting, the U.S. central bank policy makers said they expect to keep interest rates near zero until the end of 2014. Bernanke, however, said any additional expenses for the current economic stimulus is something that is 'dangerous'. He felt that the U.S. economy this year was stronger than expected with a projected increase in employment opportunities. the central bank forecast that the unemployment rate will drop to between 7.8 to 8.0 percent by the end of this year. U.S. unemployment rate now is 8.2 percent, the lowest figure in three years, increasing positive expectations about the country's economic prospects. Federal Reserve expects economic growth could reach between 2.4 percent to 2.9 percent by the end of this year, higher than previous projections. Given this
situation, the Federal Reserve to keep short-term bond exchange policy on long term bonds measures that will ensure low interest rates, thus stimulating investment. However, Bernanke said he remained cautious with emphasis on finding new methods if the situation remained volatile. "We will not hesitate to use the method of additional support if economic need, "he said. He also warned that the debate on the escalating debt among members of U.S. Congress, may be among the causes of delay in economic recovery. At year end, automatic tax increase and expenditure reduction will be effective if Congress fails to take action. Bernanke warned that the matter will be a 'disaster'. Bernanke said, the scope of the problems now faced by lawmakers and the Federal Reserve is a limited ability to 'wash any broken plate. "With the large size of the fiscal gap, I think , there is no opportunity for the Federal Reserve to cushion the economy, "he said. In general, analysts and investors do not expect any new measures during the meeting that the Federal Reserve, although the central bank's view that recognizes recovery is now simple and decided not to take new measure of it, support the stock market from further depreciation. "signal is received by our Federal Reserve is not expected to purchase additional assets. However, the projected recovery in the labor market and economic growth, has boosted the market, "said the investor.