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Fed keeps borrowing costs low

Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed. The Associated Press
Friday, March 22, 2013 - 12:01 am

WASHINGTON – The Federal Reserve on Wednesday stood by its efforts to keep borrowing costs at record lows, saying it isn't yet convinced that the U.S. economy's growth can accelerate without significant help from the central bank.

It wants to see sustained improvement.

Fed officials reinforced their plan to keep short-term interest rates at rock-bottom levels at least until unemployment falls to 6.5 percent.

An unemployment rate of 6.5 percent is a threshold, not a "trigger," for a possible rate increase, Chairman Ben Bernanke said.

"We are seeing improvement," he said. "One thing we would need is to see this is not temporary improvement."

The Fed will continue buying $85 billion a month in bonds indefinitely to keep long-term borrowing costs down. Bernanke said the Fed might vary the size of its monthly purchases depending on whether the job market improves and by how much.

The unemployment rate has fallen to a four-year low of 7.7 percent, among many signs of a healthier economy.

Investors seemed pleased with the Fed's decision to maintain its low-rate policies for now. The Dow Jones industrial average closed up about 56 points, having risen slightly after the Fed's statement was released.