Federal Reserve
The Federal Reserve went further than ever Wednesday to assure consumers and businesses that they'll be able to borrow cheaply well into the future.
The Fed pushed back the earliest date for any likely increase in its benchmark interest rate by at least a year and a half, until at least late 2014. It said record-low rates are still needed to help boost an improving but still sluggish economy.
Bonds Beat Stocks in 2011 -- But Don't Expect That to Repeat
1:00PM 1/12/2012
By Rick Aristotle Munarriz, The Motley Fool
Economy, Stock Picks, Investing Basics, Stocks in the News, Market News
For the first time in several decades, the 30-year annualized returns of Treasury bonds surpassed the dividend adjusted gains of the S&P 500 in 2011. Take a picture if you want -- because this won't last.
The final weeks of 2011 were among the economy's strongest as Americans shopped and traveled more, ending the year with a shot of optimism for 2012. That's the bright picture the Federal Reserve sketched in a survey released Wednesday.
In a major shift, the Federal Reserve will start updating the public four times a year on how long it plans to keep short-term interest rates at record lows, according to minutes from its December policy meeting. The first forecast will be included in the central bank's economic projections after its Jan. 24-25 meeting, the minutes said.
The Federal Reserve says the economy has grown moderately as hiring and consumer spending have improved. As a result, it's holding off on any new steps to boost the economy. But Fed officials, noting that unemployment remains high and global economic growth has slowed, left open the possibility of taking new steps next year if the economy worsens.
The Federal Reserve under Ben Bernanke has gone further than ever to explain its policies to the public. It's ready to go further still. A Fed policy meeting Tuesday will likely focus in part on an evolving plan to reveal the direction of interest rates more explicitly.
The Federal Reserve plans to stress test six large U.S. banks against a hypothetical market shock, including a deterioration of the European debt crisis, as part of an annual review of bank health. The Fed said it will publish next year the results of the tests for six banks that have large trading operations: Bank of America, Citigroup, Goldman Sachs, JPMorgan Chase, Morgan Stanley and Wells Fargo.
The Federal Reserve is holding off on any new actions to help the economy because stronger growth is giving it time to gauge the impact of steps it's already taken. Fed policymakers made the announcement after a two-day meeting.
Consumers paid more for food and gas last month, although inflation outside those volatile categories was tame. The Labor Department says the Consumer Price Index rose 0.3% in September, below August's 0.4% rise. Excluding food and energy, so-called core prices increased 0.1%, the smallest rise since March.
After Ben Bernanke pulled a trick from the 1960s Fed handbook to twist down long-term interest rates, experts are mixed on how it will affect the U.S. economy. Wall Street reacted negatively to the news. The Dow fell 284 points.
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