Press Association

US bankers in interest rates pledge

US central bankers have pledged to hold interest rates at record lows for an "extended period" to help foster further economic recovery.

In the first such announcement since last week's semi-official recognition that the country was now out of recession, the Federal Reserve noted that economic activity had "continued to pick up".

But Fed chairman Ben Bernanke and his colleagues added that rising unemployment and tight credit conditions were hampering consumer confidence and could hold back a speedy return to prosperity.

They reported: "Household spending appears to be expanding but remains constrained by ongoing job losses, sluggish income growth, lower housing wealth and tight credit."

As such, the Fed opted to hold the target range for its bank lending rate at a record low of zero to 0.25%.

It added that economic conditions are "likely to warrant exceptionally low levels of the federal fund rate for an extended period".

Last week, an advance estimate of gross domestic product (GDP) by the Bureau of Economic Analysis suggested that US output expanded at an annual rate of 3.5% in the third quarter.

The return to economic growth after a prolonged period of shrinkage was the strongest sign yet that the recession has ended.

But economists have noted that other indicators are less promising.

Employment figures out later this week are expected to show that people are still being laid off, with the rate of joblessness expected to hit 10% in the not-too-distant future.