The Federal Reserve has pledged, again, to keep rates exceptionally low through at least mid 2013 – but said financial market turbulence posed threats to economic growth – leaving the door open to further easing next year.
Paul Bellew is a former Fed Senior Economist and current Chief Economist at Nationwide.
“They are breathing a little bit of a sigh of relief right now, as I think everybody is. If we go back to the summer and we look at the concerns over the pace of the recovery at that juncture so I would say not off the table but at least stall for a while or put on the shelf for a little bit of time.”
In a statement released after its final one-day meeting of the year, the Fed said the U.S. economy has been expanding moderately, notwithstanding the apparent slowing in global growth.
“While indicators point to some improvement in overall labor market conditions, the unemployment rate remains elevated.”
It added that household spending is improving but that business investment is increasing less rapidly, and that the housing sector remains depressed.
That said, the Fed reiterated that it will continue to assess the economic outlook and is prepared to employ its tools to promote a stronger economic recovery.