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

800-Pound Man Determined to Slim Down

Man says he was kicked out of hospital for ordering pizza; wants to be an actor More

Australia Prepares to Resettle 12,000 Syrian Refugees

Preference will be given to refugees from persecuted minorities, and the first group is expected to arrive before late December More

S. African Miners Seek Class Action Suit Against Gold Mines

The estimated 100,000 say say they contracted the lung diseases silicosis and tuberculosis in the mines More

This forum has been closed.
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.
Amnesty Accuses Saudi Coalition of ‘War Crimes’ in Yemeni
Henry Ridgwell
October 12, 2015 4:03 PM
The human rights group Amnesty International has accused the Saudi-led coalition of war crimes in airstrikes against Houthi rebels in Yemen. Henry Ridgwell reports the group says hundreds of civilians have been killed in strikes on residential areas.

Video Amnesty Accuses Saudi Coalition of ‘War Crimes’ in Yemen

The human rights group Amnesty International has accused the Saudi-led coalition of war crimes in airstrikes against Houthi rebels in Yemen. Henry Ridgwell reports the group says hundreds of civilians have been killed in strikes on residential areas.

Video No Resolution in Sight to US House Speaker Drama

Uncertainty grips the U.S. Congress, where no consensus replacement has emerged to succeed Republican House Speaker John Boehner after his surprise resignation announcement. Half of Congress is effectively leaderless weeks before America risks defaulting on its national debt and enduring another partial government shutdown.

Video New Art Exhibit Focuses on Hope

Out of struggle and despair often comes hope. That idea is behind a new art exhibit at the American Visionary Art Museum in Baltimore, Maryland. "The Big Hope Show" features 25 artists, some of whom overcame trauma and loss. VOA’s Deborah Block reports.

Video Columbus Day Still Generates Controversy as US Holiday

The second Monday of October is Columbus Day in the United States, honoring explorer Christopher Columbus and his discovery of the Americas. The achievement is a source of pride for many, but for some the holiday is marked by controversy. Adrianna Zhang has more.

Video Anger Simmers as Turks Begin to Bury Blast Victims

The Turkish army carried out new air strikes on Kurdistan Workers Party (PKK) targets on Sunday, a day after the banned group announced a unilateral cease fire. The air raids apparently are in retaliation for the Saturday bombing in Turkey's capital Ankara that killed at least 95 people and wounded more than 200 others. But as Zlatica Hoke reports, there are suspicions that Islamic State is involved.

Video Bombings a Sign of Turkey’s Deep Troubles

Turkey has begun a three-day period of mourning following Saturday’s bomb attacks in the capital, Ankara, that killed nearly 100 people. With contentious parliamentary elections three weeks away, the attacks highlight the challenges Turkey is facing as it struggles with ethnic friction, an ongoing migrant crisis, and growing tensions with Russia. VOA Europe correspondent Luis Ramirez reports.

Video Afghanistan’s Progress Aided by US Academic Center

Recent combat in Afghanistan has shifted world attention back to the central Asian nation’s continuing civil war and economic challenges. But, while there are many vexing problems facing Afghanistan’s government and people, a group of academics in Omaha, Nebraska has kept a strong faith in the nation’s future through programs to improve education. VOA’s Greg Flakus has more from Omaha, Nebraska.

Video House Republicans in Chaos as Speaker Favorite Withdraws

The Republican widely expected to become the next speaker of the House of Representatives shocked his colleagues Thursday by announcing he was withdrawing his candidacy. The decision by Majority Leader Kevin McCarthy means the race to succeed retiring Speaker John Boehner is now wide open. VOA National Correspondent Jim Malone reports.

Video German, US Officials Investigate Volkswagen

German officials have taken steps to restore some of the reputation their car industry has lost after a recent Volkswagen diesel emissions scandal. Authorities have searched Volkswagen headquarters and other locations in an effort to identify the culprits in the creation of software that helps cheat on emission tests. Meanwhile, a group of lawmakers in Washington held a hearing to get to the bottom of the cheating strategy that was first discovered in the United States. Zlatica Hoke reports.

Video Why Are Gun Laws So Hard for Congress to Tackle?

Since taking office, President Barack Obama has spoken out or issued statements about 15 mass shootings. The most recent shooting, in which 10 people were killed at a community college, sparked outrage over the nation's gun laws. But changing those laws isn't as easy as many think. VOA's Carolyn Presutti reports.

Video In 'He Named Me Malala,' Guggenheim Finds Normal in Extraordinary

Davis Guggenheim’s documentary "He Named Me Malala" offers a probing look into the life of 18-year-old Malala Yousafsai, the Pakistani teenager who, in 2012, was shot in the head by the Taliban for standing up for her right to education in her hometown in Pakistan's Swat Valley. Guggenheim shows how, since then, Malala has become a symbol not as a victim of brutal violence, but as an advocate for girls’ education throughout the world. VOA’s Penelope Poulou has more.

Video Paintable Solar Cells May Someday Replace Silicon-Based Panels

Solar panels today are still factory-manufactured, with the use of some highly toxic substances such as cadmium chloride. But a researcher at St. Mary’s College, Maryland, says we are close to being able to create solar panels by painting them on a suitable surface, using nontoxic solutions. VOA’s George Putic reports.

VOA Blogs

World Currencies


Rates may not be current.