US interest rates look set to stay at their current low levels for a considerable period, with the Federal Reserve Board indicating it is in no rush to sanction an increase.
The Fed's key Federal Open Market Committee (FOMC) announced last night that rates would remain at current levels and that it believed it could remain "patient" before starting to increase them
The statement used similar language to that issued following the previous meeting at the end of January and reassured the markets that the Fed would leave its key funds rate on hold at 1 per cent for quite some time.
Many analysts now expect that an increase may not come until after November's presidential election, particularly following recent weak US employment figures.
The Fed lowered rates last summer to levels not seen since 1958 and yesterday's statement said that it continued to believe that this, together with productivity gains in US industry, "is providing important ongoing support to economic activity".
In the key part of its statement, the FOMC said "it believes that it can be patient in removing its policy accommodation" - seen as "Fedspeak" that no early increase in interest rates is planned.
The statement buoyed the US markets, even though no change in the Fed's stance had been anticipated.
Output in the US economy is continuing to expand at a "solid pace" the FOMC statement said, though it accepts that, while job losses have slowed, "new hirings has lagged."
Inflation is expected to remain "muted" it said, though fears that the economy would lapse into deflation - one of the factors behind last year' rate cuts - have eased.
The FOMC repeats January's statement that the probability of an unwelcome fall in inflation has diminished "and now appears almost equal to that of a rise in inflation".
It also reiterates that "the upside and downside risks to the attainment of sustainable growth for the next few quarters are roughly equal".
The Fed's assessment reflects the fact that, while the economy has clearly gained strength, it has failed to generate significant numbers of jobs despite increasing company profits.
In turn, this has raised some concern about the sustainability of consumer spending.
Some 2.2 million non-farm jobs have been lost since President Bush took office in 2001.
The Democratic candidate, Mr John Kerry, has hit back, calling corporate executives who move jobs from the United States to countries providing cheap labour traitors.
Just 21,000 US jobs were created in February, well below forecasts and far short of the roughly 100,000 monthly pace economists feel is needed to absorb the number of job-seekers.
The Federal Reserve's chairman, Mr Alan Greenspan - echoing Bush Administration officials including Treasury Secretary Mr John Snow - said last week the job picture should brighten "before long as output continues to expand".
Mr Greenspan has also emphasized that rates cannot stay low indefinitely, although many economists see no rate increase coming until well into this year or even next. - (Additional reporting by Reuters)
