The US Federal Reserve resumed a meeting today that was expected to lead to a quarter-percentage point interest rate cut.
The Fed will announce its decision on rates and offer an assessment of threats facing the economy at around 2.15 p.m. (1815 GMT).
Fed policy-makers gathered shortly after the government said the economy grew at a sluggish 0.6 per cent annual rate in the first quarter, a slightly stronger-than-expected pace, as inventory-building tempered a deteriorating housing market and softer consumer spending.
Another report showed US private sector employers unexpectedly added 10,000 jobs in April, suggesting the economy retained some resilience
"The key here is that a pullback is more shallow than expected," said Marc Pado, a US market strategist at Cantor Fitzgerald & Co. in San Francisco.
The data had little impact on financial market expectations for the Fed meeting. Interest rate futures prices implied an 80 per cent chance of a quarter-point reduction and a 20 per cent probability the Fed would hold rates steady, little changed from late yesterday.
Fed policy-makers have already cut benchmark overnight interest rates by 3 percentage points to 2.25 per cent since mid-September.
In addition to lowering rates to spur the economy, the central bank has rolled out a series of emergency steps to pump billions of dollars of liquidity into financial markets to beat back a credit crunch. Policy-makers will debate a new liquidity tool - paying interest on bank reserves - today.
The Fed's rate cuts have led to a weakening in the US dollar that has pushed import prices higher, adding to inflation pressures. But Fed officials believe unemployment is likely to climb amid the economy's weakness, making it difficult for businesses to raise their prices, a view that may gain greater sway after the GDP report.
Policy-makers also expect the combined effects of the central bank's rate cuts - which act with a lag - and a $152 billion fiscal stimulus package will provide a boost to the economy in months to come.