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Fed blames weather in part for slower US economy

Published on Mar 20, 2014 3:06 AM

WASHINGTON (AFP) - The Federal Reserve cut back its stimulus program by another US$10 billion (S$12.6 billion) Wednesday despite the recent US economic slowdown, which it blamed “in part” on severe winter weather.

The Federal Open Market Committee reduced stimulus spending to US$55 billion a month, saying the broader economy has “sufficient underlying strength” to support continued improvement in the labor market.

But new Fed Chair Janet Yellen said that the central bank still did not foresee raising its base fed funds interest rate until next year, as long as unemployment remains too high and inflation is well-controlled. “We know we are not close to full employment,” she said.

In a review of recent conditions and its monetary policy, the FOMC said growth had slowed during the winter months, and that the housing sector recovery remains slow. Meanwhile it called indicators from the labor market “mixed” but said that they “on balance showed further improvement.”

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