Federal Reserve, U.s. Economy | featured news

The Federal Reserve said Wednesday that it would continue its stimulus campaign at the same pace it has maintained since December, just as investors had expected.

A few Federal Reserve policymakers expected to taper the pace of asset purchases by midyear and end them later this year, while several others expected to slow the pace a bit later and halt the quantitative easing program by year-end, according to minutes of the Fed's March meeting.

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.

The U.S. economy should emerge from the doldrums next year if the Federal Reserve sticks to its super-easy monetary policies, a top Fed official said on Thursday, even as he warned that cutting back too early would be a "big mistake."

U.S. consumer prices were flat last month, the latest sign inflation is in check. That could give the Federal Reserve leeway to continue its efforts to stimulate growth. The Labor Department says the consumer price index has risen 1.6 percent in the 12 months ending in January. That's down from a 2.9 percent pace a year ago.

The Federal Reserve, noting that economic growth had “paused” in recent months, said Wednesday that it would continue its efforts to stimulate the economy for as long as it deemed necessary.

The Federal Reserve has left little doubt about its plans, but inside the central bank, debate is moving from whether the Fed should do more to stimulate the economy to when it should start doing less.

The US Federal Reserve may have underestimated the looming 2007 global financial crisis, released transcripts from its meetings that year have shown. The documents suggested Fed Governor Ben Bernanke wanted to hold off from addressing rising panic in the markets.

The US Federal Reserve's latest report on the economy says activity has picked up slightly in the past two months.