By Tim Mullaney, USA TODAY |
The Federal Reserve left interest rates unchanged at a meeting of its policy-making committee, reiterating the central bank's vow to keep rates at "extremely low'' levels if necessary through late 2014.
The Fed's meeting comes as the economy has sent conflicting signals in recent weeks, showing better-than-expected improvement in some measures and disappointing results in others.
An uptick in new claims for unemployment insurance, coupled with slower job growth and durable goods orders in March, has renewed concerns that unemployment could remain high.
Despite the wobbling economy, the Fed was expected to keep interest rates steady, and wasn't expected to launch another stimulative round of bond purchases yet, said
Instead, investors are anticipating new economic forecasts by the Fed's policy-making committee that the Fed is scheduled to release before Chairman
If the Fed signals that it now believes unemployment will fall more rapidly or that inflation would rise faster than previous forecasts, that might indicate it would raise rates sooner than late 2014 or be less likely to increase bond buying, Maki said.
"There is less slack than they thought,'' said Maki. "It could start to change interpretation of how much slack there is in the economy.''
The Fed is more likely to pump money into the economy by buying bonds if the economy is growing far more slowly than its estimated potential, and less likely if it is growing almost as fast as it can without sparking inflation, said
With the economy likely to grow between 2% and 2.5% this year, the Fed may hold off indefinitely on more bond buying, also known as quantitative easing or QE, Canally said.
"Not needing more QE should be good for the economy,'' Canally said.
Inflation hawks are hoping the Fed doesn't launch another round of bond buying, said
"Its not the Fed's job to fix every problem in the economy,'' Wesbury said in a presentation this week. "For
Copyright: | Copyright 2012 USA TODAY |
Source: | USA Today |
Wordcount: | 433 |
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