WASHINGTON — The Federal Reserve reaffirmed its plan to purchase $600 billion of Treasury bonds through the second half of 2011, while holding the federal funds target rate in the zero to 0.25% range, the Federal Open Market Committee announced Tuesday.
The economy is recovering, according to the Fed, but not robustly enough to bring down a national unemployment rate that rose to 9.8% in November from 9.6%. Household spending also is up, but is being constrained by the high jobless rate.
Thomas Hoenig dissented with his fellow Fed policymakers for the eighth straight FOMC meeting, saying the continued high level of monetary accommodation is inappropriate because it creates the potential for higher long-term inflation that could destabilize the economy
The fed funds rate is the nation's benchmark lending rate.
"The FOMC kept the federal funds rate at levels that have not been seen in the post-World War II period, indicating that they continue to view current economic conditions as fragile," said Steven Wood, chief economist at Insight Economics. "The committee is prepared to keep interest rates very low for an extended time, generally accepted code words for at least another six months or so."
