News
US interest rates left unchanged
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The Federal Reserve has kept US interest rates on hold at between 0% and 0.25%, as had been widely expected. Despite the US economy growing 3.5% in July to September - its first expansion since June 2008 - rates were left unchanged to further aid the recovery. In August the US central bank said it would keep rates at the historic low for an "extended period." Unemployment remains a concern, with the US jobless rate having risen to 9.8% in September, a 26-year high. The most recent official jobless figure illustrates how the labour market traditionally lags behind any wider economic recovery. Recovering car sales Analysts have also cautioned that the economic expansion between July and September was greatly helped by President Obama's $787bn (£480bn) stimulus package, with some fearing that growth will slow markedly when this impetus comes to an end.
One of the most successful parts of the stimulus spending was the $3bn "cash for clunkers" car scrappage scheme, which gave people who traded in old cars $3,500 towards the cost of a new vehicle. This initiative operated in July and August, giving US car sales a major boost in both months. Car sales subsequently fell sharply in September after the scheme had concluded. However, both General Motors and Ford reported earlier this week that their domestic sales rose again in October, suggesting that the recovery in the US car market has now resumed. US interest rates were cut to the current level of between 0% and 0.25% in December last year, where they have remained ever since. Before then rates had fallen steadily from a high of 5.25% in September 2007. BBC News |
