Fed Pledges Low Interest Rates Through 2014

At the Federal Reserve’s latest meeting the Board of Governors decided to continue its policy of quantitative easing by pledging to maintain low interest rates at least until the end of 2014.  The action is based on analysis that anticipates unemployment will remain high and inflation will remain relatively low during that period of time. The Fed expects the economy to grow slower than originally estimated at between 2.2 percent and 2.7 percent this year. Original estimates called for growth at 2.5 to 2.9%.

The Fed does not anticipate further bond-buying programs, but did not deny the possibility of taking further measures if the economy does not perform as well as anticipated.

The Fed targets unemployment to fall to 8.2%, a reduction of .3% from its earlier prediction.  Inflation is expected to hold steady at about 2%.  Earlier the Federal Reserve indicated that it would not act to restrict inflation as long as it stayed under the 2% mark.

On the positive side of the economy Fed chairman, Ben Bernanke, sees improving consumer confidence and a pick up in retail sales, but headwinds still exist in the global economy and in high unemployment rates here at home.  The Fed will be prepared to take further measures if it sees the recovery is faltering.