Fed Renews Vow to Keep Rates Low

The Federal Reserve sounded more upbeat about the direction of the economy, citing signs of an improving job market and increased household spending, according to a statement released after the Fed’s annual policy-making committee meeting.

The Fed said they expect “moderate economic growth,” but threats still remain, such as a sluggish housing market. The Fed renewed its commitment at the meeting to keep interest rates at record-lows.

The committee “is clearly shifting its stance away from blanket gloom to something more realistic, but they have a long way to go,” Ian Shepherdson, chief economist at High Frequency Economics, told The New York Times.

The Fed has vowed to continue to keep short-term interest rates near zero until late 2014, possibly longer. The Fed also has been stockpiling Treasury securities, which may even reduce borrowing costs more too. Mortgage rates have been at -- or hovering near -- all-time record lows for several weeks.

Source: “In Otherwise Dour Report From Fed, the Tiniest Touch of Optimism,” The New York Times (March 13, 2012)