Thursday, March 21, 2013

The Fed Looks Ahead

The Federal Reserve governors met earlier this week, and released a statement yesterday reiterating their basic policies. That means, primarily, that interest rates will stay at near-zero levels until unemployment - which is currently at 7.7 percent - drops down to 6.5 percent.

They also see the economy continuing to expand, but at a glacial pace. Their forecast was for the unemployment rate to drop only to 7.3 to 7.5 percent by the end of the year, and to 6.7 to 7.0 percent by the end of 2014. Their GDP growth forecast for the remainder of this year is 2.3 to 2.8 percent.

Inflation, the other side of the Fed's mandate, remains under control; the Fed expects it to stay around its target of 2 percent through 2015. Given the targets they've sent, the upshot is that interest rates are likely to stay at their current low levels until 2015.

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