If you were greatly increasing economy in 2012 you might not see the type of rebound you were hoping for as the Federal Reserve on Wednesday said internet rates will likely remain at super-low rates until 2014, a signal that the organization doesn’t believe the economy will right itself before that time.
In a statement the Fed said the economy has “moderately” picked up but growth is expected to be sluggish at best with an increase of just 2.7% in 2012 and 3.2% in 2013. If all goes as planned the agency believes economy growth could climb to 4% in 2014.
According to the chief US economist at HSBC in a discussion with the New York Times :
“What did we learn today? Things are bad, and they’re not improving at the rate that they want them to improve.”
That assessment came after the Feds attempted to increase transparency this week when for the first time they published the individual predictions of the policy-making committee’s 17 members. Of those members 11 said they expected interest rates to stay low until 2014.
News of the extended low rates didn’t have much effect on market pricing as such an announcement was expected.
In his statement chairman Ben Bernanke wrote:
“I wouldn’t overstate the Fed’s ability to massively change expectations through its statements. It’s important for us to say what we think, and it’s important for us to provide the right amount of stimulus to help the economy recover from its currently underutilized condition.”
The Fed also stated that they would like to push unemployment under 6% before the end of 2014 while keeping inflation around 2%. Analysts expect inflation to sit around 6.7% by the end of 2014.
