Federal Reserve: Low Rates Until Late 2014
Federal Reserve Chairman Ben Bernanke announced that the Federal Reserve is contemplating additional asset purchases to increase growth and more importantly its promise to keep interest rates low through late 2014.
The buying of bonds is “an option that's certainly on the table,” according to Mr. Bernanke at a news conference after a Federal Open Market Committee meeting in Washington on Wednesday. The federal reserve is “prepared to provide further monetary accommodation if employment is not making sufficient progress towards out assessment of its maximum level, or if inflation shows signs of moving further below its mandate-consistent rate.”
In troubling news, the federal reserve lowered its forecast for economic growth and price increases this year and in 2013. Its long term inflation goal is 2%.
The FOMC said in a statement that “the Committee expects to maintain a highly accommodating stance for monetary policy.” Moreover, “Economic conditions – including low rates of resource utilization and a subdued outlook for inflation over the medium run – are likely to warrant exceptionally low levels for the federal funds rate at least through late 2014.”
The growth forecast from the federal reserve is for 2.2% to 2.7% this year and 2,8% to 3.2% next year.
Follow Technorati