The risk of deflation is witnessed to increase beyond the required benchmark, Ben Bernanke, the Fed chairman, warned the audience in Boston yesterday. In addition, he pointed that experts have augured that high unemployment rate would continue to remain as it is for some time.
The central bank of America is enduring its toughest policy challenge witnessed in decades as it discerns the risks related to embarking on another round of quantitative easing (QE) – or printing money.
Financial markets are now sure that the federal government will inject over $1.7 trillion (£1.1 trillion) in them. Fed had earlier unleashed the same during the time of recession.
On the other hand, some Fed officials have shown concerns that unceasingly low inflation is holding back consumers spending power midst of citations that prices will eventually mark a fall further.
The Fed's options center on buying more assets in a view to divulge money into the economy, in addition to changing the way it imparts policy to financial markets and the economy, Mr Bernanke explained.
"The stage has been set for a QE programme to be launched in early November", posted Kevin Logan, chief US economist at HSBC. "Now we can await hints to see what form it will actually take".