The
U.S. central bank says it will keep its benchmark interest rate near
zero at least until late 2014, a new move to try to spark the sluggish
growth of the world's largest economy.
The Federal Reserve had previously said it would keep its key lending
rate low through mid-2013. But on Wednesday, officials lengthened the
low-interest period, saying they expect that economic growth over the
next several three-month segments will be modest, and that the nation's
8.5 percent unemployment rate “will decline only gradually.”
The U.S. economy has slowly regained strength in the prolonged aftermath
of the country's recession from 2007 to 2009, America's worst in seven
decades. But even with some recent favorable economic trends, Federal
Reserve Chairman Ben Bernanke said officials are not “ready to declare
we've entered a new, stronger phase.”
Some private economic analysts have predicted that the country's economy
could advance by as much as 3 percent in 2012. But Bernanke said central
bank officials are projecting growth of 2.2 to 2.7 percent this year,
down from their November projection of 2.5 to 2.9 percent. The central
bank chief said officials think the national economy will gradually
advance to a range of between 3.3 and 4 percent in 2014.
He described the U.S. jobless rate as “elevated,” but said it could fall
further to 8.2 percent this year, and to a range of 6.7 to 7.6 percent
by late 2014. Bernanke said central bank officials have set a 2 percent
inflation target rate for the U.S. and that it could fall in the
1.4-to-1.8-percent range this year.
U.S. economic officials have regularly voiced their disappointment that
their efforts to spur the American economy have not boosted it as fast
as they would like. Bernanke said the Federal Reserve would not hesitate
to take further action if the country continues to “have this
unsatisfactory situation.”
Even with its vast economy, the U.S. could be sharply affected by the
governmental debt crisis in Europe, one of its largest trading partners,
and the slowing world economy. The International Monetary Fund this week
slashed its 2012 projection for the growth of the global economy from 4
to 3.3 percent.
U.S. employers added 200,000 new jobs in December, and consumer spending
has picked up somewhat. But about 13 million workers remain unemployed,
with millions more working part-time or at jobs they consider beneath
their skills.
The
state of the nation's economy, including the unemployment rate and the
creation of more jobs, has become the key issue in this year's
presidential election campaign as U.S. President Barack Obama seeks a
second four-year term. The two leading Republican presidential
contenders — one-time venture capitalist Mitt Romney and former House of
Representatives Speaker Newt Gingrich — have both regularly criticized
Mr. Obama's oversight of the national economy. They are vying to become
the Republican nominee to oppose the Democratic president in November's
national election.
The central bank's key interest rate is the one that banks use to lend
each other money overnight when they need more funds. The Federal
Reserve has set the target for the rate at zero to a quarter of a
percentage point since December 2008, during the worst of the U.S.
economic downturn. The rate does not control consumer and business
lending rates in the country, but helps influence what banks charge
their customers.
The central bank said the country's economic conditions “are likely to
warrant” the continuation of the low benchmark rate for the extended
period.
The
U.S. central bank says it will keep its benchmark interest rate near
zero at least until late 2014, a new move to try to spark the sluggish
growth of the world's largest economy.