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Fed backs extended support policies

AMERICAN monetary policy is likely to remain accommodative for at least six months to support economic growth, a top United States Federal Reserve official said today in Shanghai.

The policy-setting Federal Open Market Committee voted last week to keep its benchmark rate near zero for an "extended period" and said measures to support the housing market will end this month as planned.

"Extended period is a conditional statement but I would expect it means that will hold for the next three or four meetings, which will be about six months," said Charles L. Evans, president of the Federal Reserve Bank of Chicago, today in Shanghai.

"Frankly I think that conditions would continue towards substantial accommodation certainly through the end of this year," Evans told a press briefing. "I wouldn't be surprised if that is required into 2011."

He said that in containing US inflation, he strongly supported accommodative policies until the unemployment rate comes down or rising inflationary pressures emerge.

He said inflationary pressures in the US are "extremely well contained," with core inflation about 1.5 percent, within a target of 2 percent.

The targeted unemployment rate is 5 percent. The US unemployment rate held at 9.7 percent in February.

"Employment is often the last piece of the puzzle in the United States to fall into place," Evans said.

He also said that during his meetings with business in the US, the yuan issue doesn't come up as much as production development or other issues partly because companies have a variety of hedges against currency risks.


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