Fed To Keep Interest Rates Near Zero

The Federal Reserve Announced today it would seek to keep interest rates near zero into 2013.

The Fed says economic growth so far this year has been slower than expected, there's been a deterioration in overall labor market conditions in recent months, and the unemployment rate has moved up. Moreover, household spending has flattened out, investment in nonresidential structures is still weak, and the housing sector remains depressed.

In addition, downside risks to the economic outlook have increased. The Federal Open Market Committee also anticipates that inflation will settle, over coming quarters, at levels at or below those consistent with the Committee's dual mandate as the effects of past energy and other commodity price increases dissipate further. However, the Committee will continue to pay close attention to the evolution of inflation and inflation expectations.

The Committee decided today to keep the target range for the federal funds rate at 0 to 1/4 percent. The Committee reports it currently anticipates that economic conditions--including low rates of resource utilization and a subdued outlook for inflation over the medium run--are likely to warrant exceptionally low levels for the federal funds rate at least through mid-2013.