Federal Reserve Says Economy Showing Moderate Improvement
The Federal Reserve said Wednesday that the U.S. economy is improving only moderately and still needs its support to help lower unemployment.
The Fed took no new action after a two-day policy meeting. It wants time to assess whether the aggressive steps it launched in September will boost economic growth and job creation.
In a statement, the central bank said job growth has been slow and the unemployment rate remains elevated. It noted that consumer spending has strengthened slightly and that housing has shown further signs of improvement. But growth in business investment has slowed.
The Fed’s updated view of the economy comes less than two weeks before the U.S. presidential election, after a campaign that has focused on the state of the economy. In its statement, the Fed noted that inflation has recently risen slightly because of higher energy prices. But it said inflation over the long run should remain mild.
The statement was approved on an 11-1 vote. Jeffrey Lacker, president of the Federal Reserve Bank of Richmond, objected for the seventh consecutive meeting. Lacker has been concerned that the Fed’s policy steps could lead to higher inflation.
Last month, the Fed began buying mortgage bonds to try to push long-term interest rates lower and make home buying more affordable. It also said it planned to keep its benchmark short-term rate near zero through mid-2015.
The unemployment rate fell in September to 7.8 percent, the first time it’s been below 8 percent since January 2009. But the economy is still growing too slowly to accelerate job growth.
The economy grew at a meager 1.3 percent annual rate in the April-June quarter. Economists think it grew slightly faster in the July-September quarter. The government will report its first estimate of third-quarter growth on Friday.
Fed officials reiterated Wednesday that they intend to hold rates low even after the economic recovery has strengthened. That’s a signal that the Fed will keep intervening until the economy grows fast enough to reduce unemployment sharply.
– By MARTIN CRUTSINGER