Wednesday, August 10, 2011

Federal Reserve Announces Intention To Keep Interest Rates Low

link here to article

The Federal Reserve lowered its outlook on the US economy by announcing that it would keep short term interest rates close to zero for the next two years. It is very unusual for the Fed to signal its intentions so clearly. It believes that there is little threat to inflation and it is concerned that 25 million Americans are unable to find full time work.

The announcement stimulated the US stock market and it helped the Asian market to rebound earlier today. The Fed still has some ammunition left if it becomes more concerned about the economy. It could decide to purchase long term US treasuries and other securities that would keep long term interest rates low.

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