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Federal Reserve Clarifies When Short-Term Interest Rates Might Rise

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Fed Clarifies Guidance On Short-Term Rates

WASHINGTON (AP) - The Federal Reserve is seeking to clarify when it might start to raise short-term interest rates from record lows.
    
The Fed also says it will cut its monthly long-term bond purchases by another $10 billion to $55 billion because it thinks the economy is strong enough to support further improvements in the job market.
    
The Fed is reaffirming its plan to keep short-term rates low to help support the economy. But it no longer mentions a specific unemployment rate that might lead it eventually to raise short-term rates. The Fed says instead it will monitor "a wide range of information" on the job market, inflation and the economy before approving any rate increase.
    
It announced the policies in a statement after its first meeting with Janet Yellen as chair.

Fed Foresees Steady Growth Despite Winter Setbacks

WASHINGTON (AP) - Federal Reserve officials expect the U.S. economy to grow at a steady if modest pace in 2014 despite weather-related setbacks this winter.
   
The Fed forecasts growth of 2.8 percent to 3 percent this year, a bit lower than its December projection of between 2.8 percent and 3.2 percent.
   
The forecast suggests that Fed policymakers will continue to pare their monthly bond purchases, which are intended to stimulate growth by keeping interest rates low. The Fed's first policymaking meeting under new Chair Janet Yellen ended Wednesday.
   
The Fed expects unemployment to fall further this year than it thought in December. It forecasts that the unemployment rate will drop to 6.1 percent to 6.3 percent by the end of this year, down from its December projection of 6.3 percent to 6.6 percent.

(Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.)



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