At its Tuesday meeting, the Federal Reserve reaffirmed its pledge to
keep interest rates low and opted to not take any new measures to
bolster the economy, saying the economy has already been showing signs
of “expanding moderately.” The economy has shown some improvement in
employment and consumer spending in recent weeks. However, the Fed
cautioned at Tuesday’s meeting that the "housing sector remains
depressed."
In reaffirming a pledge it first issued in August, the Fed said the
federal funds rate -- which serves as a benchmark rate for many types of
loans, including mortgages -- will remain near zero until mid-2013. The
Fed said it will continue with plans to move $400 billion of its bond
portfolio into longer-term securities, which ultimately could send
long-term interest rates even lower.
Overall, the Fed said the economy has steadily been showing signs of
improvement and is on track to post its strongest gains of the year in
the final months of 2011. But the Fed said that the European debt crisis
will continue to pose a major threat to recovery with “strains in
global financial markets continue to pose significant downside risks."
Source: “U.S. Fed Leaves Rate Unchanged, Says Economy Expanding Moderately,” Bloomberg News (Dec. 13, 2011)
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