US Central Bank Weighs New Economic Stimulus

Posted September 13th, 2012 at 10:00 am (UTC-5)
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The U.S. central bank is deciding whether to launch new measures to stimulate the weak U.S. economy.

After a two-day meeting, Federal Reserve officials are set to announce any policy changes at mid-day Thursday, with Chairman Ben Bernanke later making a statement on the Fed's projections for the American economy, the world's largest.

Bernanke last month called the slack hiring in the U.S. labor market a “grave concern.”

With that in mind, American economists are predicting the central bank will approve a new round of bond-buying to try to decrease already-low interest rates and spur borrowing and spending by businesses and consumers. The Fed has bought more than $2 trillion worth of U.S. Treasury bonds and home loan securities since the world financial crisis in 2008, but the country's economic growth has remained sluggish.

The central bank could also extend its timetable beyond late 2014 for keeping its benchmark borrowing rate near zero percent.

The central bank maintains political neutrality in the U.S. But whatever policy changes it might adopt would land in the final stages of country's presidential election campaign, where the state of the economy is the key issue.

Republican challenger Mitt Romney says the incumbent Democrat, President Barack Obama, has failed in his oversight of the American economy and that he would not reappoint Bernanke when his Fed chairmanship ends in early 2014. Mr. Obama has pointed to 30 months of job growth in the U.S. and says Mr. Romney would return to policies that led to the worst U.S. economic downturn since the Great Depression of the 1930's.

The U.S. government reported last week that the country's labor market added just 96,000 jobs in August, not near enough to reduce the country's unemployment count of nearly 13 million workers. The jobless rate has been above an unusually high 8 percent level for 43 straight months.

The government said Thursday the number of Americans making first-time claims for jobless benefits last week increased by 15,000 to 382,000, another sign of slow job growth.