In its description of the economy, the Fed noted that "household spending is expanding at a moderate rate but remains constrained by high unemployment, modest income growth, lower housing wealth, and tight credit." Also, the housing market has yet to turn a significant corner and the commercial real estate market remains in dire straits.
"Investment in nonresidential structures is declining, housing starts have been flat at a depressed level, and employers remain reluctant to add to payrolls," the Fed statement said.
Since U.S. Federal Reserve Chairman Ben S. Bernanke raised the central bank's discount rate last month, some investors have grown skittish at the possibility of further tightening of the Fed's monetary policy. For that reason, the language in each Fed statement has been highly scrutinized by the public.
Most analysts believe that as a potential interest rate hike draws near, the FOMC will change its language from "an extended period" to something more immediate.
"They're getting close to one. They're going to change the language before they do anything else," Robert Brusca, chief economist at Fact & Opinion Economics, told CNBC.
The Fed announced no changes to its plan to wind down purchases of mortgage-backed assets.
News and Related Story Links:
- Money Morning:
Fed Plan to End Mortgage-Backed Securities Purchase Program Brings Market Anxiety
- Money Morning: Fed's Discount-Rate Increase Illustrates Exit-Strategy Challenges That Await the U.S. Central Bank
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