Federal Reserve Stands At the Ready To Revive Economy

bernanke 2 Federal Reserve Stands At the Ready To Revive EconomyThe Federal Reserve today announced that it is ready to provide additional monetary-policy support to the economy. In a statement announcing the Federal Open Market Committee’s decision to leave interest rates between 0 percent and 0.25 percent, the Fed said that inflation is lower than the central bank is comfortable with and output and employment are slowing.

What investors were looking for was an inkling as to whether the Fed would continue its policy of quantitative easing — lowering long-term interest rates by buying up Treasury securities. Those who’d hoped for another round Fed Treasury purchases got their wish. Said the Fed:

The Committee will continue to monitor the economic outlook and financial developments and is prepared to provide additional accommodation if needed to support the economic recovery and to return inflation, over time, to levels consistent with its mandate.

The Fed also said it foresees keeping interest rates at an extreme low for “an extended period.”

The central bank had voted eight to one to keep rates lower. The one dissenting banker, Thomas Hoenig, says that the economy is recovering at a moderate pace and that persisting in keeping interest rates low will have disruptive long-term effects on the economy.