News / Economy

US Central Bank May Ease Stimulus Efforts Later This Year

Federal Reserve Chairman Ben Bernanke speaks during a news conference in Washington, June 19, 2013.
Federal Reserve Chairman Ben Bernanke speaks during a news conference in Washington, June 19, 2013.
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VOA News
U.S. Federal Reserve Chairman Ben Bernanke says the bank may ease back on efforts to stimulate the economy later this year, because the economy is growing moderately.

"Job gains, along with the strengthening housing market, have in turn contributed to increases in consumer confidence and supported household spending," Bernanke said.

But Bernanke says the jobless rate is still too high, so the bank will continue stimulus efforts for the time being.

In 2008, the Fed cut short-term interest rates to a record low to boost the economy during the financial crisis.  When that produced disappointing results, the central bank added a program intended to push down long-term interest rates through purchases of $85 billion worth of securities each month.

Related video report by Mil Arcega
US Fed Holds Steady on Stimulus, Low Interest Ratesi
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June 20, 2013 12:33 AM
Federal Reserve policymakers say U.S. monetary policy will remain unchanged despite a modest improvement in economic growth. That means long term interest rates are likely to remain at record lows for the time being. Despite assurances that the Fed will continue with the easy money policies that have boosted stock prices to record highs, financial markets remain volatile. Mil Arcega has more.
Bernanke says the Fed will continue the purchase program for now, but could gradually reduce it if the economy continues to improve.  He said action to raise short-term interest rates is even further in the future.

Stimulus efforts focus on low interest rates, because they make it cheaper for businesses to finance new equipment, expand factories, and hire new people.  But if a stimulus program goes on too long, it can overshoot and spark inflation.  

Bernanke spoke after two days of meetings with the top officials of the Federal Reserve, who assessed the economy and debated courses of action.  

In a report, they said the U.S. jobless rate may fall as low as low as 7.2 percent by the end of this year and improve to 6.5 percent in 2014.  

The 6.5 percent figure is significant because Fed officials have said they will continue stimulus efforts at least until the jobless rate falls a bit more than 1 percentage point to hit that level.

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