US growth revised down
AMERICA’S economy will grow by 2.7 per cent this year, the Federal Reserve announced last night, revising down its previous forecast of 2.9 per cent.
Yet despite admitting to a confusingly gloomy economic outlook, chairman Ben Bernanke yet again refused to suggest that the Fed would embark on a controversial third programme of quantitative easing (QE3).
“In August of last year when I began to talk about asset purchases, inflation was very low and falling,” Bernanke said.
While some analysts have cited subsequently rising US inflation as a threat to the economy, Bernanke credited the existing quantitative easing programmes as: “Very successful in eliminating deflation risks.”
On growth, Bernanke said: “We don’t have a precise read on why this slower pace of growth is persisting.” Growth will nonetheless pick up later in the year, the Fed expects.