Federal Reserve chairman Ben Bernanke (AP Photo/Lawrence Jackson) The U.S. Federal Reserve said Wednesday that it sees the pace of economic contraction slowing, as it left interest rates unchanged.
The central bank said conditions in financial markets "have generally improved in recent months."
"Household spending has shown further signs of stabilizing but remains constrained by ongoing job losses, lower housing wealth, and tight credit," the bank said. "Businesses are cutting back on fixed investment and staffing but appear to be making progress in bringing inventory stocks into better alignment with sales."
The Fed noted that prices of energy and other commodities have risen lately, but it said that "substantial resource slack" is likely to keep a lid on prices.
The Fed's open market committee, which sets monetary policy, expects that inflation will remain subdued "for some time."
The central bank left the target for the key federal funds rate unchanged at a range of between zero and 0.25 per cent, and said it is expected to remain there for an extended period.
