Fed holds steady on stimulus, worried by fiscal drag
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The U.S. Federal Reserve said on Wednesday it will continue buying $85 billion in bonds each month to keep interest rates low and spur growth, and added it would step up purchases if needed to protect the economy.
Expressing concern about a drag from Washington's belt-tightening, the Fed described the economy as expanding moderately in a statement that largely mirrored its last policy announcement in March. Fed officials cited continued improvement in labor market conditions and did not change their description of inflation, saying it should remain at or below the central bank's 2 percent target.
But policymakers reiterated that unemployment is still too high and restated their intention to keep buying assets until the outlook for jobs improves substantially.
"Fiscal policy is restraining economic growth," the U.S. central bank's Federal Open Market Committee said in its policy statement at the close of its two-day meeting. "The Committee is prepared to increase or reduce the pace of its purchases to maintain appropriate policy accommodation."
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