The US Federal Reserve kept policy on hold at its August meeting yesterday but showed a strong bias towards further action to support the economy.

The rate-setting Federal Open Market Committee continued to forecast that it will keep interest rates low until late-2014, dashing market hopes that it might extend that date into 2015. The Fed also held off a further round of quantitative easing – or QE3 – under which it would buy more securities in an effort to drive down long-term interest rates. But it issued a powerful statement of its willingness to do more if the economy disappoints.

“The committee will closely monitor incoming information on economic and financial developments and will provide additional accommodation as needed to promote a stronger economic recovery,” said the FOMC’s statement.