Fed holds rates at record low to fuel recovery

The Federal Reserve pledged to hold interest rates at a record low to drive down double-digit unemployment and sustain the economic recovery. The Fed noted that the economy is growing, however slowly. And turning more upbeat, it pointed to a slowing pace of layoffs. Still, Fed Chairman Ben Bernanke and his colleagues gave no signal that they’re considering raising rates anytime soon. They noted that consumer spending remains sluggish, the job market weak, wage growth slight and credit tight. Companies are still wary of hiring. Against that backdrop, the Fed kept its target range for its bank-lending rate at zero to 0.25%, where it’s stood since last December. And it repeated its pledge, first made in March, to keep rates at “exceptionally low levels” for an “extended period.” In response, commercial banks’ prime lending rate, used to peg rates on home equity loans, certain credit cards and other consumer loans, will remain about 3.25%. That’s its lowest point in decades. Super-low interest rates are good for borrowers who can get a loan and are willing to take on more debt. But those same low rates hurt savers. They’re especially hard on people living on fixed incomes who are earning measly returns on savings accounts and certificates of deposit.