WASHINGTON – The U.S. economy and job creation have strengthened enough for the Federal Reserve to end on schedule a program of buying Treasury bonds to help the economy, the Fed said Wednesday.
Ending a two-day meeting, the Fed made no changes to the program. The decision was unanimous. The bond purchases were intended to lower loan rates, encouraging spending and boost stock prices. But critics worried that the purchases would feed inflation.
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The Fed downplayed inflation risks. It acknowledged a spike in oil prices, but concluded that the pickup in inflation will be temporary.
Fed Chairman Ben Bernanke spoke at a news conference after the meeting. It was the first time in the Fed’s 98-year history that a chairman has begun holding regular sessions with reporters.
Bernanke said that as long as the Fed continues to say rates will remain at historic lows for “an extended period,” rates won’t rise until the Fed has met at least twice more. It meets about every six weeks.
Bernanke said he expects the economy to continue growing through 2012 and 2013.
He acknowledged that higher gasoline prices are creating a financial hardship for many Americans. But he said the Fed doesn’t think gas prices will continue to rise at their recent pace.
Stocks rose after Bernanke said he expects the economy to continue growing through next year and 2013. The Dow Jones industrial average, which was up about 50 points when Bernanke began speaking, gained another 50 points half an hour before the market closed.
Before he spoke, the Fed offered its latest economic projections for the year. The economy will grow between 3.1 percent and 3.3 percent this year. That’s downward revision from their last forecast, which saw growth possibly as high as 3.9 percent this year. The new forecast reflects the fact the economy slowed in the first three months of this year because of higher energy costs.
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