US brings interest rates to the zero-0.25% range

The Federal Reserve has firmly moved their main policy for dealing with the current economic crisis towards their policy of quantitative easing rather than using base rates.

It has been described as a rather unconventional move that few economists could have predicted as it dumps using the tried and tested method for the first time in over 75 years.

The range is 0-0.25 percent from 1 percent and is at its lowest rate since the Federal Reserve began publishing targets.

The message is quite simple in that the Federal Reserve now has the license to print money in order to sustain the US economy until expansion is realised again.

The Fed is also looking into the possibility of buying up US gilts from 2009 as well as extending the credit available to small businesses in order to pump more money into the real economy as they vowed to use all tools available to fight off the recession.

Federal Reserve chairman, Ben Bernanke, is determined that the US must learn from its past mistakes and has looked to the Great Depression of the 1930s for inspiration.

Bernanke has said that the measure is in anticipation of even weaker economic conditions and the fund rate is likely to remain low for a long time.

Story link: US brings interest rates to the zero-0.25% range