Sunday
August 31, 2014

Fed Leaves Rates Unchanged Again

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Fed Leaves Rates Unchanged Again

The Federal Reserve says the economy hasn’t grown enough for it to end its $85 billion-a-month bond-purchasing program. The program has been helping to keep mortgage rates low, but fears mounted this summer that the Fed would begin winding it down. That has caused mortgage rates to tick up and made borrowers more concerned about the costs of a mortgage.

For now, the Fed remains in a wait-and-see mode and plans to hold its stimulus in place. 

The Fed’s announcement Wednesday, following a two-day policy-making committee meeting, did not make clear when or how it will make changes to its stimulus program when it does decide to act, The New York Times reports. The Fed’s move, however, has reinforced its commitment to hold short-term interest rates near zero through next year and into 2015. 

The Fed noted employment is improving, and it is optimistic about the “growing underlying strength in the broader economy.” 

“Taking into account the extent of federal fiscal retrenchment over the past year, the committee sees the improvement in economic activity and labor market conditions since it began its asset purchase program as consistent with growing underlying strength in the broader economy,” the Federal Open Market Committee says. “However, the committee decided to await more evidence that progress will be sustained before adjusting the pace of its purchases.”

Source: “Fed Extends Stimulus as Growth Stumbles,” The New York Times (Oct. 30, 2013)

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