Fed standing pat on economy. . . for now
The Federal Reserve said Wednesday the U.S. economy is losing strength and repeated a pledge to try to boost growth if hiring remains weak.
The Fed took no new action after a two-day policy meeting. But it appeared to signal in a statement released after the meeting a growing inclination to take further steps to lift the economy out of its funk. The Fed noted that growth had slowed over the first half of the year, with job creation slackening and consumer spending tapering off.
The Fed reiterated its plan to hold its benchmark short-term interest rate at a record low near zero until at least late 2014.
In addition to noting that the economy had "decelerated," the Fed's policymaking committee said it would "closely monitor incoming information" and "will provide additional accommodation as needed" to stimulate the economy and job creation.
Many economists believe the Fed could launch another program of buying government bonds and mortgage-backed securities at its September meeting if the economy doesn't show improvement. The goal of the program, known as quantitative easing, would be to drive long-term rates, which are already at record lows, even lower.
The Fed's next move could depend on whether the European Central Bank, which meets Thursday, takes any action to stimulate growth among the 17 countries that use the euro.
Economists forecast that U.S. employers added 100,000 jobs in July. That would be slightly better than the 75,000 a month average from April through June but still below the healthy 226,000 average in the first three months of the year. The unemployment rate is expected to stay at 8.2 percent.
Economists will also be watching Fed Chairman Ben Bernanke's words closely when he speaks on Aug. 31 at an annual economic conference in Jackson Hole, Wyo.
"The Fed took no action at this meeting but strongly hinted that there will be further easing action at the next meeting in September," said David Jones, chief economist at DMJ Advisors.