The Federal Reserve has decided to hold interest rates at a record low and pledged to keep them there for an "extended period" to keep the recovery going and drive down double-digit unemployment. But in a more upbeat assessment, the Fed says the US economy has "continued to pick up" and that "deterioration in the labor market is abating," a nod to the recent slowdown in the pace of layoffs.
Despite the improvements, Fed Chairman Ben Bernanke and his colleagues said there's still reason for caution. Spending by households, while growing at a moderate pace, remains "constrained" by the weak job market, slight wage growth, and tight credit. Against this backdrop, the Fed kept its target range for its bank lending rate at zero to 0.25 percent, where it has stood since last December. And it repeated its pledge, first made in March, to keep rates at "exceptionally low levels" for an "extended period."