(CBS/AP) WASHINGTON - The U.S. economy is expanding at a moderate pace, according to the Federal Reserve. The central bank indicated Wednesday that it will hold off taking any further steps to boost the economy.
Concluding a two-day meeting of members of its monetary policy board, the Fed said labor market conditions have improved in recent months. It also cited rising household and business spending as signs that the economy continues to recover. But the unemployment rate remains elevated, and the housing sector is "depressed," the Federal Open Market Committee said in a statement. Although inflation has picked up in recent months, largely because of higher price of crude oil and gasoline, the Fed's longer term inflation expectations remain "stable."
The FOMC, which sets monetary policy, "expects economic growth to remain moderate over coming quarters and then to pick up gradually." As a result, the Fed plans to keep its interest rate target at record lows of 0-0.25 percent "at least through late 2014."
Although the economy is recovering, economic turmoil in global financial markets continues to "pose significant downside risks to the economic outlook," the Fed said.
The FOMC also decided to continue its program to extend the average maturity of its holdings of securities, as announced in September. The committee is maintaining its existing policies of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction.
The FOMC will regularly review the size and composition of its securities holdings and is prepared to adjust those holdings as appropriate to promote a stronger economic recovery in a context of price stability.
Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Dennis P. Lockhart; Sandra Pianalto; Sarah Bloom Raskin; Daniel K. Tarullo; John C. Williams; and Janet L. Yellen. Voting against the action was Jeffrey M. Lacker, who does not anticipate that economic conditions are likely to warrant exceptionally low levels of the federal funds rate through late 2014.
In a news conference following the policy statement's release, Fed Chairman Ben Bernanke said further bond purchases by the central bank remain "very much on the table" if the economy needs further support.
The Fed remains prepared to take additional actions,he added, referring to a possible third round of bond buying. Two now-expired programs of Fed bond purchases have been intended to push down long-term interest rates to encourage borrowing and spending.
Bernanke said the central bank believes that while inflation has risen lately, it will remain within the Fed's 2 percent target.