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Fed likely to continue low-interest rate policy

5:50 AM, Apr 30, 2013   |    comments
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WASHINGTON -- The Federal Reserve Board committee that sets interest rates is opening a two-day meeting Tuesday amid speculation that the panel will decide to stick with its policy of keeping borrowing costs at record low levels.

The reason for this, observers believe, is that inflation has remained well under control and the economy has shown signs of vitality, even if modest by historical standards.

The Fed had said earlier that it planned to keep its key short-term interest rate near zero - at least until the unemployment rate dips below 6.5 percent from its current 7.6 percent.

It also has been buying $85 billion a month in Treasury and mortgage bonds, with the aim of keeping long-term borrowing rates down. The goal has been to energize the economy through more consumer and corporate borrowing.

In recent months, many economists had suggested that the Fed might scale back its bond purchases in the second half of 2013 if job growth accelerated.

(Associated Press)

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