America's central bank is trying to keep interest rates low in order to stimulate the economy
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Rising interest rates may deter US home buyers

As the US economy begins to recover from its recession, the housing market is starting to recover and interest rates are creeping up.

However the US Central Bank wants to keep interest rates low with slightly higher inflation to stimulate the economy.

To do so it is buying $600 billion in government bonds. But the bond markets are not reacting in the way that might be expected.

Caroline Hepker reports.

  • 20 Dec 2010