The United Stated Federal Open Market Committee (FOMC) announced its decision to keep the federal funds rate unchanged between 0 and 0.25 percent, in line with expectations.
The U.S. Federal Reserve said recovery will remain slow and it will keep will keep its current monetary policy stimulus for at least another two years and reinvesting payments
from securities holdings in an effort to support a sluggish economy.
The FOMC believes the current economic conditions will warrant exceptionally low levels for the federal funds rate at least through mid-2013.
The Committee made their decision based on recent economic data that indicates economic growth so far this year has been considerably slower than they had expected. Employment data gave evidence of a deterioration in the overall labour market conditions in recent months, and the unemployment rate has risen. Meanwhile consumer spending has flattened out, investment in non residential structures is still weak, and the housing sector remains slumped.
The markets initially reacted positively to the rate decision but changed course within seconds after hearing the FOMC statement and realizing there was no QE3 which they had been hoping for.
The dollar dropped against the yen to 76.74 and the Swiss franc hit a new record high against dollar, as USDCHF dipped to 70.88 after the news.