Fed Promises Low Rates until 2014
Published On January 30th, 2012

Federal Reserve officials said they expect to keep short-term interest rates near ZERO for almost three more years until 2014 which was increase six more months from last August when they were stating rates would stay near zero until Mid-2013. Also in more efforts to speed up the economic recovery they could restart the controversial bond-buying program.

Fed officials still indicate frustration at the slow pace of growth and a bit more confident that inflation is settling down after climbing last year. Bernanke poker faced as usual stated the combination of persistent slow growth and low inflation could give the Fed leeway to take more action to support the economy.

In announcing that short term interest rates will remain the same, the Fed is hoping that long term interest rates will fall which hopefully will lead to increased investing, spending and growth. Hoping is the key word because everything Bernanke seems to say or think on fixing our economy sure doesn’t seem to be working, which coupled with him thinking housing isn’t key to our economic recovery.

Per Bernanke “if the recovery continues to be modest and progress on unemployment very slow and inflation appears to be likely to be below target for a number of years out” Bernanke says there would be a “very strong case” for more action with the bond-buying program which is meant to push down long-term interest rates.
 

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