Fed stands pat, downplays pickup in economy
Higher gas prices to only boost inflation temporarily
WASHINGTON (MarketWatch) — The Federal Reserve on Tuesday kept interest rates at record lows and continued a program to swap assets it owns into riskier securities as the central bank downplayed the strength of recent economic data.
The Fed’s policy statement, released after a closed-door meeting, said the economic conditions have been expanding moderately. Although the unemployment rate has declined notably, it remains elevated. While the central bank is no longer worried about business fixed investment, the statement described the housing sector as “depressed.”
The Fed noted that gas prices would push inflation higher in the short-term but that longer-term prices would remain subdued.
The recent increase in oil and gasoline prices will push up inflation temporarily, but the FOMC anticipates that subsequently inflation will run at or below the rate it judges most consistent with its dual mandate,” the statement said.
Although strains in global markets had eased, they continue to pose “significant downside risks” to the outlook, the statement said. Read statement.
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