March 20 - Following a two-day meeting with policymakers, Fed Chairman Ben Bernanke signals he's not ready to stop buying $85 billion worth of bonds each month to rev up the economy. Fred Katayama reports.
The Fed will keep printing money to rev up the economy. The central bank decided to continue buying 85 billion dollars worth of bonds per month. It says the economy has returned to moderate growth but notes that fiscal policy had become restrictive and that the unemployment rate remains high. Fed Chairman Ben Bernanke: SOUNDBITE: FEDERAL RESERVE CHAIRMAN BEN BERNANKE (ENGLISH) SAYING: "Our analysis is fairly comparable to analysis that the Congressional Budget Office has presented to the Congress and they estimate that putting together all the fiscal measures including the fiscal cliff deal, the sequester and other cuts that federal fiscal restraint in 2013 is cutting something like 1-1/2 percentage points off of growth, which of course is very significant." And so, the Fed trimmed its estimate for economic growth this year to a range of 2.2 to 2.8 percent. The central bank also slightly shaved its estimate for the jobless rate to a range of 7.3 to 7.5 percent in the fourth quarter. But its estimates indicate unemployment won't fall to 6-1/2 percent until 2015; that's the level at which the Fed has signaled it could consider raising rates Bernanke said he's not worried about the Cypriot bailout crisis hitting the United States. SOUNDBITE: FEDERAL RESERVE CHAIRMAN BEN BERNANKE (ENGLISH) SAYING: "The only way that they would create a problem would be if the runs became contagious in some sense, if depositors in other countries lost confidence. But to this point, I am not aware of any evidence that that is in fact the case." Economist Yelena Shulyateva of BNP Paribas says the Cypriot mess justifies the Fed's stimulus program. SOUNDBITE: YELENA SHULYATEVA, U.S. ECONOMIST, BNP PARIBAS (ENGLISH) SAYING: "This is quite dangerous and that could push the markets down, and we might see some bad outcomes down the road. For the U.S. now is not quite damaging. We are benefitting from this, actually, but we also seeing that the Fed is helping us. They are putting all this liquidity in the markets and that's exactly why they are doing this. Another European crisis is just a justification for what they are doing right now." And with the inflation rate below the Fed's two percent target, economists expect the central bank will keep its foot on the pedal and only begin tapering down its stimulus program at earliest toward the end of the year.