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Fed Strikes Note Of Optimism In Pledge To Hold Rates

The Federal Reserve on Wednesday repeated its pledge to keep interest rates at record low levels for an "extended period" in an effort to keep the nation's economic recovery on track.

In a statement released at the conclusion of a two-day meeting in Washington, the Fed voted unanimously to keep benchmark borrowing costs in the zero to 0.25 percent range.

"The committee ... continues to anticipate that economic conditions, including low rates of resource utilization, subdued inflation trends and stable inflation expectations are likely to warrant exceptionally low levels of the federal funds rate for an extended period," the policy-setting Federal Open Market Committee said in a statement.

The Federal Reserve, under the leadership of Chairman Ben Bernanke, cut interest rates to lows hovering around zero last year and has said rates would remain at that level for an "extended period."

At the White House, spokesman Robert Gibbs said the Fed, Congress and President Obama's economic team helped keep the financial crisis from being more severe by taking coordinated steps that were, at times, unpopular.

"The president has confidence in Chairman Bernanke's leadership at the Fed," Gibbs said.

In its statement, the committee noted that the economic picture is beginning to improve as the country comes back from the worst recession since the 1930s.

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On the bright side, the committee noted that economic activity has continued to pick up since members met in November, and the housing sector and labor market are beginning to show signs of life.

But it also noted that the job market is still weak, and modest income growth and tight credit are reasons for caution.

Other economic news released Wednesday underscored the reasons for optimism. The Commerce Department said housing starts were on the upswing in November, increasing 8.9 percent to an annual rate of 574,000 units. The figures indicate that the housing market is getting back on track, economists said.

In addition, a report from the Labor Department showed that inflation pressures are under control. The Consumer Price Index rose 0.4 percent in November after a 0.3 percent increase in October. But energy costs were the driving factor. Excluding food and energy, the CPI was flat over the previous month.