Fed Notes Better Economy, Takes No Policy Action

Fed notes better economy, takes no policy actionWASHINGTON (AP) - The Federal Reserve offered a more positive view of the economy after a burst of hiring since its last meeting. It held off taking further steps to boost the recovery and reiterated its plan to keep short-term interest rates near zero until at least late 2014.

The Fed's statement issued after Tuesday's one-day meeting was more upbeat than the one it released in January.

The Fed said the unemployment rate has declined notably and should continue to fall as the economy expands moderately over the coming months. Household spending and business fixed investment continued to advance. And strains in the global financial markets have eased, though the Fed warned they continue to pose a threat.

The statement also said rising oil and gas prices will push up inflation temporarily. But it said longer-term inflation should remain stable - repeating a view expressed by Fed Chairman Ben Bernanke earlier this month.

The statement was approved on a 9-1. Atlanta Fed President Jeffrey M. Lacker dissented for the second straight meeting. The statement said Lacker doesn't "anticipate that economic conditions are likely to warrant exceptionally low levels of the federal funds rate through late 2014."

Stocks held their early gains. The Dow Jones industrial average was up 110 points before the Fed statement and stayed at that level shortly after the statement was released.

Since the Fed's last meeting in late January, a stream of positive economic reports has suggested the economy is doing better than the Fed anticipated.

Employers added 734,000 jobs from December through February, the best three months of hiring in two years. That's lowered the unemployment rate to 8.3 percent.

Consumers are more confident and have stepped up retail spending. Auto sales are rising. And the stock market keeps climbing.

Despite the brightening prospects, unemployment remains historically high - something Bernanke mentioned in testimony to Congress last month, when he said, "The job market remains far from normal."

Bernanke also said consumer spending and confidence remain less than healthy, inflation-adjusted pay gains are low and credit is still tight for many. As long as they are, Bernanke suggested, unemployment might not fall much further.

Bernanke's comments and remarks from other Fed officials suggest that the Fed plans to maintain its efforts to keep rates low to fuel growth.

Low rates are intended to encourage consumers and businesses to borrow and spend more. Lower yields also lead some investors to shift money out of bonds and into stocks.

Most economists don't think the Fed will retreat anytime this year from its late-2014 target for any rate increase. Some note that threats to the economy remain from Europe's debt crisis and the run-up in gasoline prices.

Eventually, the Fed will feel compelled to raise rates to curb inflation as the economy heats up. But some analysts think the Fed is reluctant to signal an eventual shift toward higher rates before it's close to a change. Signaling a change too soon might cause investors to push interest rates up before the Fed is sure the economic recovery will last.

Increase your money and finance knowledge from home

Economics 101

Intro to economics. But fun.

View Course »

Building Credit from Scratch

Start building credit...now.

View Course »

Add a Comment

*0 / 3000 Character Maximum

30 Comments

Filter by:
DDerr

The Federal Reserve is a hilarious bunch of crooks that Americans still believe are working FOR us. Ha haaa! These guys are jokes and I wonder why they have jobs at all. Un hunh, the recession has been getting better every single day since it started! Is everyone feeling better now that the Federal Reserve tells us we are better? Can anyone remember one thing or one prediction that the Feds or Bernanke actually got right? What little theiving financial robots, who have now stolen TRILLIONS OF DOLLARS FROM THE AMERICAN TAX PAYER.

March 14 2012 at 2:21 PM Report abuse rate up rate down Reply
DDerr

The Federal Reserve is a hilarious bunch of crooks that Americans still believe are working FOR us. Ha haaa! These guys are jokes and I wonder why they have jobs at all. Un hunh, the recession has been getting better every single day since it started! Is everyone feeling better now that the Federal Reserve tells us we are better? Can anyone remember one thing or one prediction that the Feds or Bernanke actually got right? What little theiving financial robots, who have now stolen TRILLIONS OF DOLLARS FROM THE AMERICAN TAX PAYER.

March 14 2012 at 2:14 PM Report abuse rate up rate down Reply
cpo1514

The Fed said the unemployment rate has declined notably and should continue to fall as the economy expands moderately over the coming months. Household spending and business fixed investment continued to advance. And strains in the global financial markets have eased, though the Fed warned they continue to pose a threat.

And in November the unemployed and working class will vote out this incompetent and his clown show. Perhaps Kenya will be in need of a Socialist in 2013??? He can visit his library.

March 14 2012 at 10:56 AM Report abuse +1 rate up rate down Reply
Samella

Can't wait until the Repulicans get in and we go back to business as usual. Cannot wait! Wouldn't it be a good ideal, to just closed down government spending and keep putting money in the pockets of the wealthy. What the heck!

March 14 2012 at 7:43 AM Report abuse rate up rate down Reply
1 reply to Samella's comment
bggdg

Government's job is not to put money in people's (rich, poor or in between) pockets. It is people's job to put money in their pockets.

Instead, governments job is to create and maintain an environment for the free and just pursuit of happines. At least the outcome, if not the very design of attempts to do otherwise serve no purpose other than to perpetuate government, while impoverishing citizens.

March 14 2012 at 2:06 PM Report abuse rate up rate down Reply
jay love

this is all a bunch of Obama lie's? the economy is not growing, nor on the upswing and unemployment is not declining? more and more people are simply given up on looking for a job, or have ehausted their benefits? also, if the economy were doing better we would see growth NOW, not be looking for groth to come as the Feds say? all these rosey statements and reports being put forth by the Obama administration are designed to make them look better for the election year? the age old question still applies, do you feel you are better off today than you were four years ago?? truly do you? if you do then its simple, vote for Obummer, if not and I don't feel I am, then vote for whoever has the best chances of replacing him this year? I voted for Obama in 2008, but I won't do so again thats for sure, I am sorry I did!! worst president in modern times, even worse than Jimmy Carter?

March 14 2012 at 1:30 AM Report abuse rate up rate down Reply
1 reply to jay love's comment
Sean

Yeah, Obama has his hands into everything. It's all a lie. Rush, Hannity and the entire AM band know exactly what they're talking about. Being as most of them are college dropouts and draft dodgers.
You are entitled to you own opinion, but, not your own facts.

March 14 2012 at 10:42 AM Report abuse rate up rate down Reply
1 reply to Sean's comment
cpo1514

Ahhh Sean.... the truth hurts.... like a typical Lib, you cannot / will not allow the facts to present themselves. You sir, are truly one of the uneducated being led by the uninformed Libs.

March 14 2012 at 10:58 AM Report abuse rate up rate down
jay love

this is all a bunch of Obama lie's? the economy is not growing, nor on the upswing and unemployment is not declining? more and more people are simply given up on looking for a job, or have ehausted their benefits? also, if the economy were doing better we would see growth NOW, not be looking for groth to come as the Feds say? all these rosey statements and reports being put forth by the Obama administration are designed to make them look better for the election year? the age old question still applies, do you feel you are better off today than you were four years ago?? truly do you? if you do then its simple, vote for Obummer, if not and I don't feel I am, then vote for whoever has the best chances of replacing him this year? I voted for Obama in 2008, but I won't do so again thats for sure, I am sorry I did!! worst president in modern times, even worse than Jimmy Carter?

March 14 2012 at 1:30 AM Report abuse rate up rate down Reply
sallyjay2000

The employment rates are dropping because the 99ers still have no jobs and no unemployment.

March 14 2012 at 1:02 AM Report abuse +1 rate up rate down Reply
1 reply to sallyjay2000's comment
bggdg

Exhausting ones unemployment benefits has NOTHING to do with the unemployment rate.

Do you also see flying pigs?

March 14 2012 at 2:08 PM Report abuse rate up rate down Reply
harlson

believeing in our feds words is a joke- like when Wells Fargo charged me for tooooo many deposits of my hard earned $$$ into their bank. If you don't think that is insnae then I have some property to sell you in Los Wages Nevada, anywhere in Arizona or Florida condos!

March 14 2012 at 12:55 AM Report abuse rate up rate down Reply
Nestor

Don't believe this line from the chairman that gas prices boost inflation. There is only ONE reason for inflation and that is when the privately (and secretly) owned Fed (not part of the US government but a private bank) floods the economy with more worthless currency to cover out of control spending. Inflation is caused when the government spends more than it takes in from taxes. If every PENNY the rich earned were taxed, it would not begin to cover the excess government spending. Stop letting your goverment and the press lie to you! Why the US government ever created a private bank to regulate the currency beats me. Going off the gold standard and "floating" our currency was the final straw. Now we are going to have 'h' to pay... just wait.

March 14 2012 at 12:51 AM Report abuse rate up rate down Reply
Nestor

Don't believe this line from the chairman that gas prices boost inflation. There is only ONE reason for inflation and that is when the privately (and secretly) owned Fed (not part of the US government but a private bank) floods the economy with more worthless currency to cover out of control spending. Inflation is caused when the government spends more than it takes in from taxes. If every PENNY the rich earned were taxed, it would not begin to cover the excess government spending. Stop letting your goverment and the press lie to you! Why the US government ever created a private bank to regulate the currency beats me. Going off the gold standard and "floating" our currency was the final straw. Now we are going to have 'h' to pay... just wait.

March 14 2012 at 12:20 AM Report abuse rate up rate down Reply