:Central Bank Keeps Rates Low, Says Economy Recovering but Not Fast Enough to Cut Jobless Rate:
The Federal Reserve stuck to its policy of buying $600 billion in U.S. Treasury bonds and keeping short-term interest rates near zero amid signs that the recovery is gathering steam.
New retail sales data showed consumers kicked off their holiday shopping with a burst of spending, leading many private economists to raise their forecasts for economic growth. Economists expect the tax-cut package that Congress is likely to approve this week to bolster the recovery further next year.
But the Fed was restrained in its own assessment of the economy. The recovery is continuing, "though at a rate that has been insufficient to bring down unemployment," the central bank said in a statement at the end of the one-day meeting, its last of the year. Consumer spending is increasing at a "moderate pace," officials said, adding it remains constrained by a jobless rate that's still nearly 10%.
Fed officials reaffirmed that their plan to buy U.S. Treasury debt through June could be adjusted depending on how the economy fares, and signaled no inclination to change course. Some Fed officials hope their steady-as-she-goes approach will help to dispel lingering market doubts about their commitment to the program after weeks of internal and external criticism of the effort, which doubters say will cause inflation and a much weaker dollar.
The central bank could be settling into a relatively quiet period after months of fraught decision-making. Officials could be in a position to spend the early part of next year assessing the program and the economy before signaling their next steps. Better economic growth and still-tame inflation take pressure off the Fed to shift its stance.
"I don't think they have in their minds that there will be anything major happening at upcoming meetings," Michael Feroli, a J.P. Morgan economist said. That is, he added, unless "you get a big growth or inflation surprise."
