FedRes Signals Near-Zero Rates At Least Through Late 2014 !
- The action on interest rates implies inflation and thus currency debasement. Gold and silver have rocketed since the announcement!
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Fed Signals Near-Zero Rates At Least Through Late 2014
By Luca Di Leo and Tom Barkley of DOW JONES NEWSWIRES
WASHINGTON -(Dow Jones)- Federal Reserve officials Wednesday said they expect short-term interest rates to stay close to zero “at least through late 2014,” even longer than previously indicated, a move that could aid the U.S. economy’s slow path to recovery.
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Ahead of the rollout of their new communication strategy, officials projected that rates could stay at a record low for another three years as unemployment comes down only slowly and inflation moderates. Since August, the Fed had been saying that its lending rate would remain close to zero “at least through mid- 2013.”
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The central bank will release more details about where the 17 officials in the Fed’s decision-making body see rates over the next few years at 2:00 pm ET, part of a push to improve the agency’s communications. A few minutes later, Fed Chairman Ben Bernanke may provide further guidance on the central bank’s steps during a news conference.
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By releasing its rate projections the Fed has two goals in mind. Reducing the public’s uncertainty about the central bank’s strategy could make it more effective in managing the economy. The Fed may even be able to drive longer-term rates lower, revving up the recovery by spurring investment and spending, if its projections for short-term rates see them staying at a record low for longer than people think.
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In the statement following their two-day meeting, Fed officials noted some slight improvements in the economy and jobs, but warned that the recovery remains too slow and is marked by significant risks.
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“While indicators point to some further improvement in overall labor market conditions, the unemployment rate remains elevated,” officials said. “Strains in global financial markets continue to pose significant downside risks to the economic outlook.”
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The jobless rate edged down to 8.5% in December, the lowest level in almost three years, and the number of people filing for unemployment benefits has declined sharply recently. However, unemployment still remains high, holding back consumer spending and the broader economy.
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Fed officials are concerned the economy could be hit by higher taxes and continued government layoffs next year, as well as repercussions from Europe’s debt crisis. With inflation expected to come down in 2012, most don’t see the need to raise rates until late 2014.
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