Federal Reserve, Interest Rate | featured news

The central bank affirmed that it would keep up its existing efforts to stimulate the economy, even though it expected a return to moderate growth.

To quell the latest financial crisis, the Federal Reserve smashed interest rates to the floor by buying bonds with money it effectively prints. Since 2008 assets on the Fed’s balance sheet, including those bonds, have tripled, to $3 trillion. (Hey, people needed encouragement, and low rates are encouraging.) The mixed results: Entrepreneurs and homeowners got some relief, while savers got whacked along with the value of the U.S. dollar. Starving for yield, investors piled into stocks, pushing the Dow Jones Industrial Average to its all-time high, absent inflation.

Billionaire investor Warren Buffett says stock prices have gotten a boost from low interest rates caused by the Federal Reserve's stimulus efforts.

The central bank said Wednesday that it would maintain short-term interest rates near zero, even after it stops buying bonds, for as long as the unemployment rate stayed above 6.5 percent.

Chairman Ben Bernanke offered a wide-ranging defense Monday of the Federal Reserve's aggressive policies to stimulate the still-weak economy. The Fed needs to drive down long-term borrowing rates because the economy isn't growing fast enough to reduce high unemployment, Bernanke said in a speech to the Economic Club of Indiana. The unemployment rate is 8.1 percent.

The Federal Reserve, hoping to give another shot in the arm to the pallid recovery, announced it would launch a new round of a controversial bond-buying stimulus program. The central bank also further extended its pledge to keep short-term interest rates near zero, now through the middle of 2015.

A growing number of small and medium-sized banks are merging as shrinking profit margins, tepid loan demand and low interest rates place pressure on their operations. Conditions are unlikely to improve as the Federal Reserve contemplates another round of stimulus that could push rates even lower.

Investors appeared unimpressed Wednesday with the Federal Reserve's latest step to help the economy, an extension of a program to lower long-term interest rates. Stocks were little changed for the day, and the yields on Treasury bonds were trading about where they were before the Fed's announcement.

The Federal Reserve is crucifying the U.S. economy on a cross of two-percent inflation... The Fed makes a very simple promise: It promises to keep inflation at a certain level every year. That level has changed over the past 30 years, but it's currently around 2% a year. If the economy is running too hot, the Fed raises interest rates. If it's running cold, it lowers rates.

Top Federal Reserve officials, saying the economy is expanding moderately, reaffirmed their pledge to keep short-term interest rates at record lows through 2014.