WASHINGTON – The U.S. economy still isn’t healthy enough to grow at a consistently strong pace without the Federal Reserve’s help.
That was the message Fed Chair Janet Yellen sent Wednesday at a news conference after the Fed ended a two-day policy meeting.
Yellen made clear that despite a steadily improving job market and signs of creeping inflation, the central bank sees no need to raise short-term interest rates from record lows anytime soon.
Her remarks followed a statement from the Fed that it would further slow the pace of its long-term bond purchases. The bond purchases have been intended to keep long-term loan rates low. But the Fed offered no clear signal about when it will start raising its benchmark short-term rate.
Stock investors appeared pleased with the message that rates would remain low. Major indexes surged more than a half-percentage point, with the Standard & Poor’s 500 index reaching a record. And the yield on the 10-year Treasury note dipped to 2.59 percent from 2.65 percent.
The last thing that Janet Yellen wants is for the market to think she’s anywhere close to tightening, said David Robin of the brokerage Newedge. She nailed it.
Most economists say a rate hike is at least a year away despite signs of rising inflation. Yellen downplayed inflation concerns. Recent inflation figures are noisy, she said.