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What The Fed Said

The job market's getting worse, housing is still in the dumps, and the risk of more economic trouble is rising, the Fed said in its statement today.

What's more, the economy is likely to remain weak for years to come. So the Fed will probably keep short-term interest rates near zero until mid-2013, in an effort to goose the economy by encouraging more borrowing and spending.

In ordinary times, a near-promise from the Fed to keep rates near zero for two years would be seen as a dramatic, radical policy.

But the Fed's big moves over the past few years — particularly the two rounds of quantitative easing in which the Fed created trillions of dollars out of thin air, and used the money to buy bonds — make today's announcement less surprising.

Some Fed watchers are calling for more quantitative easing. But even the plan to keep rates near zero for two years prompted an unusual amount of dissent among the Fed's leaders. Three of the 10 members of the Federal Open Market Committee voted against it. The dissenters wanted to stick with its much vaguer promise to keep interest rates low "for an extended period."

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