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Thursday, December 15, 2011
Federal Reserve Keeps Rates Unchanged
(NewsCore) - Federal Reserve officials left their policy options open for 2012 but took no actions Tuesday and offered an assessment of the economy that was guardedly more upbeat, but still marked by "significant downside risks."
Nine out of 10 Fed officials voted to keep the central bank's easy-credit policies unchanged for the second meeting in a row in what was the last Federal Open Market Committee meeting of the year. It took place the day of Fed Chairman Ben Bernanke's 58th birthday.
Officials reiterated that short-term interest rates are likely to stay close to zero until mid-2013 at least. In their assessment of the economy, they said indicators pointed to some improvement in the US jobs market.
Data since they last met at the start of November suggests the "economy has been expanding moderately, notwithstanding some apparent slowing in global growth," Fed officials said in a statement.
The US unemployment rate fell to 8.6 percent in November, the lowest level since March 2009, and the number of people filing for unemployment benefits has fallen recently.
Still, the Fed is concerned the economy could be hit by higher taxes and continued government layoffs next year, as well as the repercussions from the debt crisis in Europe, which has close financial and trade ties with the US. With inflation expected to come down in 2012, some Fed officials have already started to argue in favor of additional steps to spur growth.
The Fed is looking at revamping its communication strategy, which could be a step toward easier monetary policy. Officials are considering whether to make their internal interest-rate forecasts public. If they do that, and those forecasts suggest short-term interest rates will stay low for even longer than investors now believe, that could drive long-term rates down and be a boost to growth.
The post-meeting statement gave no indication of the state of that debate. That suggests the Fed has left it to be resolved next year. Minutes of the meeting, due out in three weeks, might reveal more.
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