(NY Times) The Federal Reserve Signals That a Full Recovery Is Years Away

Posted by Kendall Harmon

The Federal Reserve said on Wednesday that it was likely to raise interest rates at the end of 2014, but not until then, adding another 18 months to the expected duration of its most basic and longest-running response to the financial crisis.

The announcement means that the Fed does not expect the economy to complete its recovery from the 2008 crisis over the next three years. By holding short-term rates near zero beyond mid-2013, its previous estimate, the Fed hopes to hasten that process somewhat by reducing the cost of borrowing.

The Fed said in a statement that the economy had expanded “moderately” in recent weeks, but that unemployment remained at a high level, the housing sector remained in a deep depression, and the possibility of a new financial crisis in Europe continued to threaten the domestic economy.

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Filed under: * Economics, PoliticsEconomyConsumer/consumer spendingCorporations/Corporate LifeHousing/Real Estate MarketLabor/Labor Unions/Labor MarketThe Banking System/SectorThe Credit Freeze Crisis of Fall 2008/The Recession of 2007--The U.S. GovernmentFederal ReservePolitics in General

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Posted January 26, 2012 at 5:00 am [Printer Friendly] [Print w/ comments]
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