Federal Reserve policy makers said the U.S. economy is maintaining its expansion even as the global economy slows, while refraining from taking new actions to lower borrowing costs.
“The economy has been expanding moderately, notwithstanding some apparent slowing in global growth,” theFederal Open Market Committee said in a statement at the conclusion of its meeting today in Washington. “While indicators point to some improvement in overall labor market conditions, the unemployment rate remains elevated.”
Signs of an improving U.S. economy are giving officials led by Chairman Ben S. Bernanke leeway to keep policy unchanged as they discuss ways to improve how they communicate the likely future path of interest rates to the public. At the same time, unemployment at 8.6 percent and risks to global growth from the European debt crisis may prompt more easing in coming months.
“Any additional stimulus is greatly going to depend on what happens in Europe or any changes in the U.S. outlook,”said John Silvia, chief economist at Wells Fargo Securities LLC in Charlotte, North Carolina “They will wait for a longer meeting, maybe in January, to come up with anything regarding communications.”
Today’s statement reiterated the warning at the Fed’s two previous meetings that “Strains in global financial markets continue to pose significant downside risks to the economic outlook.” Bernanke said last month that the sentence refers to the European debt crisis.
Reduced Target Rate
The Fed left unchanged its statement that economic conditions are likely to warrant “exceptionally low” interest rates “at least through mid-2013.” The central bank lowered its target overnight interest rate to a range of zero to 0.25 percent in December 2008.
Source: Bloomberg
