Fed adds more punch to its pledge of low interest rates

msnbc.com/ By John W. Schoen, Senior Producer

New normal, meet the new Fed.

The Federal Reserve took two major new steps Wednesday to assure businesses and consumers that it intends to keep borrowing costs at record low levels for the foreseeable future – at least three years.

For the first time in its 94-year history, the central bank opened its mind to the public, publishing a collection of charts that break down policymakers’ forecasts on interest rates, inflation and unemployment.  And for the first time ever, it set an explicit target for inflation, 2 percent a year, instead of an implied target.

Both steps are in keeping with Fed Chairman Ben Bernanke’s stated goal of making the Fed’s decisions ever more transparent. Economists welcomed the new moves but said they have their own risks.

The first headline to come out after central bankers ended their two-day meeting Wednesday was the news that policymakers do not expect to raise short-term interest rates until late 2014 at the earliest, rather than mid-2013 as they said a month ago.  Those record-low rates are still needed to help boost an improving but still sluggish economy, the Fed said in the new statement.   More >>

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