The US Federal Reserve has kept the benchmark interest rate unchanged at near-zero levels and said overseas problems have resulted in less conducive financial conditions for the country's economic growth.
The Federal Open Market Committee (FOMC), which decides on the national monetary policy, has retained the key interest rate in the range of 0-0.25 per cent. The key rate has been at the same level since December 2008.
After the conclusion of its two-day meeting on Wednesday, the FOMC said the economic conditions are likely to warrant exceptionally low levels of the federal fund rate for an extended period.
Striking a cautious note, the Fed pointed out that "financial conditions have become less supportive of economic growth on balance, largely reflecting developments abroad".
The spiralling European debt turmoil, which has its epicentre in Greece, has cast a shadow on the global economy and poses the risk of even derailing the fragile recovery. The apex bank also noted that the economic recovery is proceeding" while the labour market is seeing gradual improvement.
Interestingly, the FOMC after its meeting in April had said economic activity has continued to strengthen. "Household spending is increasing but remains constrained by high unemployment, modest income growth, lower housing wealth, and tight credit... Bank lending has continued to contract in recent months," it said.
The US economy is growing at a healthy pace but high unemployment remains a major concern. The jobless rate stood at 9.7 per cent in March.
"The FOMC anticipates a gradual return to higher levels of resource utilisation in a context of price stability, although the pace of economic recovery is likely to be moderate for a time," it added.
