US recovery weak; Fed plans $600 bn bond buy

Noting that the United States economic recovery is still not strong enough, the Federal Reserve has said it would pursue with the proposed $600-billion government securities buyout plan.

The purchase, announced last month, has attracted international criticism as many feel the move could further beat down the American dollar.

There are also concerns that weak greenback could increase fund flows into emerging nations as well as spur more trade imbalances.

"The economic recovery is continuing, though at a rate that has been insufficient to bring down unemployment...," the Federal Open Market Committee said in a statement after their meeting on Tuesday.

FOMC, the Federal Reserve's key body that decides monetary policy, noted that it would continue expanding the holding of securities to boost economic recovery.

In November, the Federal Reserve said it would buy $600 billion worth government securities by June 2011.

Continuing with dovish monetary approach, the apex bank has also left benchmark interest rate unchanged in the range of 0-0.25 per cent.

The rate has been at this level since December 2007. "... economic conditions, including low rates of resource utilisation, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels for the federal funds rate for an extended period," the statement said.

Even though, the American economy expanded 2.5 per cent in the September quarter, the unemployment levels remains very high.

The jobless rate in November stood at 9.8 per cent.