Facing an economy that is perking up slightly but still deep in recession, the Federal Reserve left its rescue policies unchanged on Wednesday and said that it would keep interest rates low for “an extended period.”
As expected, the central bank said that it would keep its benchmark overnight interest rate at virtually zero — where it has been since December — and signaled that it would continue buying long-term Treasury bonds and other government-backed securities to keep long-term rates low.
Policy makers did not announce any expansion of efforts to stimulate the economy, even though government forecasters predicted that unemployment would continue to rise from its already high level of 9.4 percent and would not begin to edge down until next year.
In a statement accompanying its decision, the central bank said that the “pace of economic contraction is slowing” and noted that financial markets had generally improved while consumer spending had shown signs of stabilizing.
Policies put in place “will contribute to a gradual resumption of sustainable economic growth in a context of price stability,” the statement said.
But the Fed warned that “economic activity is likely to remain weak for a time,” and repeated its longstanding vow to use “all available tools” to promote a recovery. In its statement, the Fed said that the economy would remain weak and that inflation would remain “subdued for some time.”