News / Economy

US Central Bank Sees Low Interest Rates Through 2014

Specialist Tina Vlitas watches the rate decision of the Federal Reserve as she works on the floor of the New York Stock Exchange, January 25, 2012.
Specialist Tina Vlitas watches the rate decision of the Federal Reserve as she works on the floor of the New York Stock Exchange, January 25, 2012.

The U.S. central bank says it will keep its benchmark interest rate near zero at least until late 2014, a new move to try to spark the sluggish growth of the world's largest economy.

The Federal Reserve had previously said it would keep its key lending rate low through mid-2013.  But on Wednesday, officials lengthened the low-interest period, saying they expect that economic growth over the next several three-month segments will be modest, and that the nation's 8.5 percent unemployment rate "will decline only gradually."

The U.S. economy has slowly regained strength in the prolonged aftermath of the country's recession from 2007 to 2009, America's worst in seven decades.  But even with some recent favorable economic trends, Federal Reserve Chairman Ben Bernanke said officials are not "ready to declare we've entered a new, stronger phase."

Some private economic analysts have predicted that the country's economy could advance by as much as 3 percent in 2012. But Bernanke said central bank officials are projecting growth of 2.2 to 2.7 percent this year, down from their November projection of 2.5 to 2.9 percent.  The central bank chief said officials think the national economy will gradually advance to a range of between 3.3 and 4 percent in 2014.

He described the U.S. jobless rate as "elevated," but said it could fall further to 8.2 percent this year, and to a range of 6.7 to 7.6 percent by late 2014.  Bernanke said central bank officials have set a 2 percent inflation target rate for the U.S. and that it could fall in the 1.4-to-1.8-percent range this year.

U.S. economic officials have regularly voiced their disappointment that their efforts to spur the American economy have not boosted it as fast as they would like.  Bernanke said the Federal Reserve would not hesitate to take further action if the country continues to "have this unsatisfactory situation."

Even with its vast economy, the U.S. could be sharply affected by the governmental debt crisis in Europe, one of its largest trading partners, and the slowing world economy.  The International Monetary Fund (IMF) this week slashed its 2012 projection for the growth of the global economy from 4 to 3.3 percent.

U.S. employers added 200,000 new jobs in December, and consumer spending has picked up somewhat.  But about 13 million workers remain unemployed, with millions more working part-time or at jobs they consider beneath their skills.

The state of the nation's economy, including the unemployment rate and the creation of more jobs, has become the key issue in this year's presidential election campaign as U.S. President Barack Obama seeks a second four-year term.  The two leading Republican presidential contenders - one-time venture capitalist Mitt Romney and former House of Representatives Speaker Newt Gingrich - have both regularly criticized Obama's oversight of the national economy.  They are vying to become the Republican nominee to oppose the Democratic president in November's national election.

The central bank's key interest rate is the one that banks use to lend each other money overnight when they need more funds. The Federal Reserve has set the target for the rate at zero to a quarter of a percentage point since December 2008, during the worst of the U.S. economic downturn.  The rate does not control consumer and business lending rates in the country, but helps influence what banks charge their customers.

The central bank said the country's economic conditions "are likely to warrant" the continuation of the low benchmark rate for the extended period.

Some information for this report was provided by AP, AFP and Reuters.

You May Like

UN Ambassador Power Highlights Plight of Women Prisoners

She launches the 'Free the 20' campaign, aimed at profiling women being deprived of their freedom around the world More

Satellite Launch Sparks Spectacular Light Show

A slight delay in a satellite launch lit up the Florida sky early this morning More

Fleeing IS Killings in Syria, Family Reaches Bavaria

Exhausted, scared and under-nourished, Khalil and Maha's tale mirrors those of thousands of refugees from war-torn countries who have left their homes in the hopes of finding a better life More

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Nobel Prize Winner Malala Talks to VOAi
X
August 31, 2015 2:17 AM
Nobel Peace Prize winner Malala Yousafzai met with VOA's Deewa service in Washington Sunday to talk about women’s rights and unveil a trailer for her new documentary. VOA's Katherine Gypson has more.
Video

Video Nobel Prize Winner Malala Talks to VOA

Nobel Peace Prize winner Malala Yousafzai met with VOA's Deewa service in Washington Sunday to talk about women’s rights and unveil a trailer for her new documentary. VOA's Katherine Gypson has more.
Video

Video War, Drought Threaten Iraq's Marshlands

Iraq's southern wetlands are in crisis. These areas are the spawning ground for Gulf fisheries, a resting place for migrating wildfowl, and source of livelihood for fishermen and herders. Faith Lapidus has more.
Video

Video Colombians Flee Venezuela as Border Crisis Escalates

Hundreds of Colombians have fled Venezuela since last week, amid an escalating border crisis between the two countries. Last week, Venezuelan President Nicolas Maduro ordered the closure of a key border crossing after smugglers injured three Venezuelan soldiers and a civilian. The president also ordered the deportation of Colombians who are in Venezuela illegally. Zlatica Hoke reports.
Video

Video Rebuilding New Orleans' Music Scene

Ten years after Hurricane Katrina inundated New Orleans, threatening to wash away its vibrant musical heritage along with its neighborhoods, the beat goes on. As Bronwyn Benito and Faith Lapidus report, a Musicians' Village is preserving the city's unique sound.
Video

Video In Russia, Auto Industry in Tailspin

Industry insiders say country relies too heavily on imports as inflation cuts too many consumers out of the market. Daniel Schearf has more from Moscow.
Video

Video Scientist Calls Use of Fetal Tissue in Medical Research Essential

An anti-abortion group responsible for secret recordings of workers at a women's health care organization claims the workers shown are offering baby parts for sale, a charge the organization strongly denies. While the selling of fetal tissue is against the law in the United States, abortion and the use of donated fetal tissue for medical research are both legal. VOA’s Julie Taboh reports.
Video

Video Next to Iran, Climate at Forefront of Obama Agenda

President Barack Obama this week announced new initiatives aimed at making it easier for Americans to access renewable energy sources such as solar and wind. Obama is not slowing down when it comes to pushing through climate change measures, an issue he says is the greatest threat to the country’s national security. VOA correspondent Aru Pande has more from the White House.
Video

Video Arctic Draws International Competition for Oil

A new geopolitical “Great Game” is underway in earth’s northernmost region, the Arctic, where Russia has claimed a large area for resource development and President Barack Obama recently approved Shell Oil Company’s test-drilling project in an area under U.S. control. Greg Flakus reports.
Video

Video Philippine Maritime Police: Chinese Fishermen a Threat to Country’s Security

China and the Philippines both claim maritime rights in the South China Sea.  That includes the right to fish in those waters. Jason Strother reports on how the Philippines is catching Chinese nationals it says are illegal poachers. He has the story from Palawan province.
Video

Video China's Spratly Island Building Said to Light Up the Night 'Like A City'

Southeast Asian countries claim China has illegally seized territory in the Spratly islands. It is especially a concern for a Philippine mayor who says Beijing is occupying parts of his municipality. Jason Strother reports from the capital of Palawan province, Puerto Princesa.
Video

Video Ages-old Ice Reveals Secrets of Climate Change

Ice caps don't just exist at the world's poles. There are also tropical ice caps, and the largest sits atop the Peruvian Andes - but it is melting, quickly, and may be gone within the next 20 years. George Putic reports scientists are now rushing to take samples to get at the valuable information about climate change locked in the ice.

VOA Blogs

World Currencies

EUR
USD
0.8916
JPY
USD
121.32
GBP
USD
0.6487
CAD
USD
1.3252
INR
USD
66.401

Rates may not be current.