US holds rates at record lows, China to follow suit

The U.S. Federal Reserve pledged Wednesday to keep a key interest rate at a record low for an "extended period," signaling that the weak American economy remains dependent on government stimulus to grow.

Most Chinese analysts also believe that China's central bank will keep its benchmark interest rate intact too, in the coming few months, according to Chinese press.

The Federal Reserve said U.S. economic activity has "continued to pick up" and that its housing market has strengthened a little bit, a good news for any sustainable recovery in the world's largest economy.

But Federal Reserve Chairman Ben Bernanke warned that rising U.S. joblessness and consistently tight credit for many American companies and households will restrain the rebound in the months ahead. "Economic activity is likely to remain weak for a time," the Federal Reserve said in a statement.

Out of those considerations, the Fed kept the target range for its bank lending rate at zero to 0.25 percent.

Meanwhile, Chinese economists say that the People's Bank of China, headed by Governor Zhou Xiaochuan, is expected to keep China's benchmark rates unchanged in at least 6 months.

On Wall Street, the Dow Jones industrial average at first held onto an increase of more than 100 points after the Fed's announcement. But stocks eventually gave up most of their gains in a late-day slump. It wasn't clear how much of a role the Fed's statement played.

On Wednesday, the Fed stuck with its pledge to keep rates at "exceptionally low" levels for "an extended period." Most analysts don't think the Fed would begin to boost rates until next spring or summer. And, the interest rates in other major economies including China will keep pace with the Federal Reserve, analysts said.

People's Daily Online