Federal Reserve policy makers said the economy in the U.S. is maintaining its expansion even as the global economy slows, while refraining from taking new actions to lower borrowing costs.
“The economy has been expanding moderately, notwithstanding some apparent slowing in global growth,” the Federal Open Market Committee said in a statement at the conclusion of its meeting today in Washington. “While indicators point to some improvement in overall labor market conditions, the unemployment rate remains elevated.”
Chairman Ben S. Bernanke and colleagues have been trying to determine whether there’s more the Fed can do to spur the economy after two rounds of large-scale asset purchases and three years of near-zero interest rates. Policy makers are also discussing how they can release more information and improve public understanding of the Fed’s broader objectives.
Today’s statement reiterated the warning at the Fed’s two previous meetings that “Strains in global financial markets continue to pose significant downside risks to the economic outlook.” Bernanke said last month that the sentence refers to the European debt crisis.
The Fed left unchanged its statement that economic conditions are likely to warrant “exceptionally low” interest rates “at least through mid-2013.” The central bank lowered its target overnight interest rate to a range of zero to 0.25 percent in December 2008.
Stocks Pare Gains
Stocks pared gains after the statement. The Standard & Poor’s 500 Index rose 0.1 percent to 1,237.03 at 2:25 p.m. in New York after rising as much as 1.1 percent. The yield on the 10-year Treasury note fell to 1.97 percent from 2.01 percent late yesterday.
The central bank said it would continue its exchange of $400 billion of short-term debt with long-term securities to lengthen the average maturity of its holdings, a move dubbed Operation Twist. The Fed also did not alter its policy of reinvesting its portfolio of maturing housing debt into agency mortgage-backed securities.
