Federal Reserve Won't Raise Interest Rates Until 2014: Signals That Full Economic Recovery Still Years Away

Well, so much for all the optimism on the economy.

Fed Chairman Ben Bernanke's not too bullish.

At New York Times, "Fed Signals That a Full Recovery Is Years Away":

WASHINGTON — The Federal Reserve said on Wednesday that it was likely to raise interest rates at the end of 2014, but not until then, adding another 18 months to the expected duration of its most basic and longest-running response to the financial crisis.

The announcement means that the Fed does not expect the economy to complete its recovery from the 2008 crisis over the next three years. By holding short-term rates near zero beyond mid-2013, its previous estimate, the Fed hopes to hasten that process somewhat by reducing the cost of borrowing.

The Fed said in a statement that the economy had expanded “moderately” in recent weeks, but that unemployment remained at a high level, the housing sector remained in a deep depression, and the possibility of a new financial crisis in Europe continued to threaten the domestic economy.

The statement, released after a two-day meeting of the Fed’s policy-making committee, said that the Fed intended to keep rates near zero until late 2014.

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The economy is expected to grow at a rate of 2.2 to 2.7 percent for this year, and unemployment is expected to remain at 8.2 percent, down from the current 8.5 percent but not at a level that would indicate robust job growth.

Maybe Republicans can make some political hay out of this. Seriously, the GOP will be snatching defeat from the jaws of victory if they lose.