Fed Will Buy Up Short-Term Debt to Boost Credit

Fed says inflation on target, but unemployment high, growth sluggish

(NEWSER) - Don't get too excited about that pending economic rebound . The Federal Reserve's announcement it will keep interest rates super-low into 2014 is a key sign that the US economy is years away from truly recovering, reports the New York Times . Yes, the economy has picked up "moderately," said the Fed in a statement, but jobs are still scarce and growth is expected to be sluggish for the foreseeable future—2.7% in 2012, 3.2% in 2013, and perhaps as high as 4% in 2014. “What did we learn today? Things are bad, and they’re not improving at the rate that they want them to improve,” said the chief US economist at HSBC. More»

Geithner, Bernanke, others missed signs of the pending collapse

(NEWSER) - The Fed released transcripts from meetings in 2006 today that reveal just how badly its top officials blew it on the looming housing crisis, the New York Times reports. The industry was showing signs of distress, but the Fed's attitude boiled down to, eh, no big deal. The officials clearly did not grasp how "deeply intertwined the housing sector and financial markets had become," writes Binyamin Appelbaum. They would get the picture soon enough. Some highlights:

• Timothy Geithner (then with the New York Fed): “We think the fundamentals of the expansion going forward still look good," he said in December 2006. A few months earlier: “We just don’t see troubling signs yet of collateral damage, and we are not expecting much."

Forecast sees it at 8.6% at end of 2012

(NEWSER) - If President Obama were hoping for a quick election-year turnaround in the jobless rate, the Federal Reserve burst his bubble today. The Fed projected unemployment will be at 8.6% at the end of 2012, not much better than the 9.1% registered in September of this year, reports the Wall Street Journal . The projections don't get remarkably better after that: The Fed sees the rate at 8% by the end of 2013 and 7.7% the following year. More»

He advises Congress not to cut spending

(AP) - Federal Reserve Chairman Ben Bernanke said today that the US economic recovery "is close to faltering" and that the central bank is prepared to take further steps to support it. (That potential action apparently pleased investors: The Dow came off the day's lows, fell a bit, then rebounded furiously to close up 153 .) Bernanke told the congressional Joint Economic Committee that the economy is growing more slowly than the Federal Reserve had expected. The biggest factor depressing consumer confidence is poor job growth, he added. More»

Some pundits think Republican leaders shouldn't play politics with Fed

(NEWSER) - The latest political firestorm comes courtesy of the top four Republicans in Congress (Mitch McConnell, John Boehner, Jon Kyl, and Eric Cantor), who wrote a letter to Ben Bernanke urging restraint on the economy. "We have serious concerns that further intervention by the Federal Reserve could exacerbate current problems," they write. (Full text here from the Wall Street Journal.) Because the Fed is supposed to be a politics-free zone, the letter has set off pundits:

• David Frum, Frum Forum : "Are they serious? ... It’s an hour of national emergency even more urgent and overwhelming than the aftermath of 9/11. ... This is the hour for united action against the economic crisis, not partisan maneuvering."