By Jeff Kearns & Joshua Zumbrun – Bloomberg Jul 31, 2013 11:12 AM PT The Federal Reserve said it will maintain its $85 billion in monthly bond purchases and persistently low inflation could hamper the economic expansion. Policy makers left unchanged their commitment to hold the target interest rate near zero as long as the jobless rate remains above 6.5 percent and the outlook for inflation over one to two years doesn’t exceed 2.5 percent. Photographer: Tim Boyle/Bloomberg “The committee recognizes that inflation persistently below its 2 percent objective could pose risks to economic performance, but it anticipates that inflation will move back toward its objective over the medium term,” the Federal Open Market Committee said today at the conclusion of a two-day meeting in Washington. Chairman Ben S. Bernanke and his colleagues are debating when employment gains will be sufficient to warrant tapering bond buying that has swelled the Fed’s balance sheet to a record $3.57 trillion. Some policy makers have said the purchases, aimed at fueling growth and reducing 7.6 percent unemployment, risk creating asset-price bubbles. The statement contained no new language on the conditions for maintaining the current pace of asset purchases. The Fed repeated the pledge it has used since September that it will continue the purchases until the U.S. labor market outlook has improved substantially. Stocks remained higher and Treasuries pared losses after the statement. The Standard & Poor’s 500 Index rose 0.5 percent to 1,693.99 at 2:05 p.m. in New York. The yield on the 10-year Treasury note climbed to 2.64 percent from 2.61 percent late yesterday.
Posted on: Wed, 31 Jul 2013 18:42:51 +0000
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