Fed Policymakers Cite an Improving Economy and Vouch to Keep Interest Rates LowDec 16 2009
December 16, 2009 - After a near two-day policy meeting, the U.S. Federal Reserve acknowledged that the labor market has begun to heal after nearly deteriorating over the past several months.
A large part of this newfound economic optimism can be partially due to several of November's upbeat reports. A few weeks ago, the U.S. Labor Department reported that unemployment had declined to 10% in November, an unexpected drop after a surge the month prior. Furthermore, as reported last week, an upsurge in retail sales also boasted that household spending appears to be expanding, though the labor market remains relatively weak.
Policymakers relayed that interest rates will continue to remain near zero and will remain there for a prolonged period of time; inflation is expected to remain low as well.
"The Committee continues to anticipate that economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels of federal funds rate for an extended period," the Fed voiced in their press statement.
Many will look to fourth quarter reports with high expectations, seeking out more reassurance that the economy is headed upward.