WASHINGTON, Aug. 12, 2009
Fed Signals Vote of Confidence in Economy
Central Bank Indicates it will End Government Debt-buying Program, Declares U.S. Economy "Leveling Out"
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Federal Reserve Board Chairman Ben Bernanke speaks at the Federal Reserve Sixth Biennial Community Affairs Research Conference in Washington Friday, April 17, 2009 (AP Photo/Alex Brandon)
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Interactive Inside The Fed A history of the Federal Reserve, glossary of terms and a look at changing interest rates.
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The Fed said it would gradually slow the pace of its program to buy $300 billion worth of Treasury securities so that it will shut down at the end of October, versus September. It has bought $253 billion of the securities so far.
The program is aimed at lowering rates on mortgages and other consumer debt, a move to spur Americans to spend more. But its effectiveness has been questioned by some on Wall Street and on Capitol Hill who worry that the program makes it look like the Fed is printing money to pay for Uncle Sam's exploding deficits.
With the economy on the mend, the Fed held a key banking lending rate at a record low near zero and again pledged to keep it there for "an extended period."
Economists predict the Fed will leave its target range for its banking lending rate between zero and 0.25 percent through the rest of this year. The rationale: super-low lending will spur Americans to spend more, which would support the economy.
If the Fed holds its key rate steady, that means commercial banks' prime lending rate, used to peg rates on home equity loans, certain credit cards and other consumer loans, will stay around 3.25 percent, the lowest in decades.
It was the first Fed meeting since the economy has flashed more definitive signs of turning a corner.
In an upgraded assessment, the Fed said the economic barometers since its last meeting in late June suggest that "economic activity is leveling out." Conditions in financial markets also "have improved further" in recent weeks, the Fed said.
But dangers lurk.
Although consumer spending has stabilized, job losses, sluggish income growth, hits to wealth from tanking home values and still hard to get credit could make Americans cautious in the months ahead, the Fed said.
Meanwhile, the majority of economists polled by the Wall Street Journal expressed support for Ben Bernanke, saying the Fed chairman should get another term. Most of the economists said the 20-month-old recession is now over and gave Bernanke much of the credit.
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- I'll start jumping for joy when the jobs start coming our way.
At this point no matter what our Government says I know it's just PR. - Reply to this comment
- The worst of this Depression will most likely be over within 4 years...It will be a triumph of Democratic philosophy and President Obama will be a national hero. He is the people's champion.
www.marymiami.wordpress.com - Reply to this comment
- Great Job!!! Mr. President
- Reply to this comment
- This is proof, that with honest, ethical, and excellent leadership, one cannot keep a great nation down.
- Reply to this comment
- Folks,
Plese Hold-On tight to your seat belts because we are all going to Heaven with this Obama Economy! Enjoy the ride!
President Obama Re-Election campaign in Nov 2012 is going to be extremely easy! - Reply to this comment
- Folks,
Plese Hold-On tight to your seat belts because we are all going to Heaven with this Obama Economy! Enjoy the ride!
President Obama Re-Election campaign in Nov 2012 is going to be extremely easy! - Reply to this comment
- Ben Bernanke is a straight shooter and cares about the country.
- Reply to this comment
- The Feds are trying their best to help Obama out.
It's not working. Obama is a failure. - Reply to this comment
