Fed to keep interest rates low until 2013

Source / Courtesy: Yahoo News

NEW YORK (CNNMoney) — The Federal Reserve painted a much gloomier picture of the economy Tuesday, and indicated it would keep cash cheap and easy for at least two more years.

Following its fifth policymaking meeting of the year, the central bank also surprised Wall Street with several dramatic changes to its official statement.

Among those surprises were dissension among the ranks of the central bank, a “considerably slower” reading on the economy, and a bold statement that the Fed stands ready to enact further stimulus measures if needed.

Interest rates: The Fed indicated it plans to keep “exceptionally low” interest rates in place until at least mid-2013 as a way to continue to prop up the recovery.

The federal funds rate is the central bank’s key tool to spur the economy and a low rate is thought to encourage spending by making it cheaper to borrow money.

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1 reply

  1. Guardian UK reported:

    The US Federal Reserve said it was prepared to use a range of policy tools should growth and unemployment continue to weaken over the coming months.

    But the US Federal Reserve made no commitment to begin a third round of quantitative easing, the process of electronic money creation that has pumped $2tn (£1.2tn) into the US banking system over the past two and a half years.


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