Fed Unconvinced Recovery Yet Warrants Higher Rates

Federal Reserve officials signaled the U.S. recovery isn’t strong enough to stoke inflation, reduce unemployment quickly or justify an end to record-low interest rates.

Central bankers yesterday retained a pledge to keep their benchmark rate “exceptionally low” for an “extended period,” one year after first using the phrase. While the economy is improving, employers are still reluctant to hire, homebuilding is “depressed” and inflation will be “subdued for some time,” the Federal Open Market Committee said in a statement after meeting in Washington.

Chairman Ben S. Bernanke and his colleagues are waiting for sustained increases in employment before starting to exit a record expansion of credit, said Charles Lieberman, a former Fed official. Stocks and Treasuries extended gains as traders pared bets the central bank will raise rates over the next 12 months.

Read Full Article from BusinessWeek

- Posted: 2010-03-17 11:11:10

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