Top officials of the U.S. central bank (Federal Reserve ) say they will keep their key interest rate at its current ultra-low level and be “patient” in assessing economic data before they raise rates.
Interest rates were cut to nearly zero during the financial crisis in a bid to boost U.S. economic growth. With the world’s largest economy recovering, such help is no longer needed and most economists expect interest rates to begin rising in the middle of 2015.
Investors watch Federal Reserve statements with great care for hints about how soon and how much rates will go up. The Dow, a key U.S. stock index, rose sharply late Wednesday as traders apparently concluded the Fed’s economic stimulus efforts will continue for a while.
Some economists say the Fed’s efforts to bolster the economy helped fuel a strong stock market rally. But others warn keeping rates too low for too long could overshoot and spark inflation that could harm the economy.
Fed Chair Janet Yellen and her colleagues got a new look at U.S. inflation. New data show falling oil prices cut prices in the overall economy by three-tenths of a percent in November. Outside the volatile areas of food and energy, prices in the overall economy rose a very modest one-tenth of a percent.
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