Signs are increasing that an economic recovery might finally be taking shape, but with dangers still lurking about, Federal Reserve policymakers are all but certain to leave a key interest rate at record lows to make sure any nascent turnaround gains traction. Fed Chairman Ben Bernanke and his colleagues are slated to wrap up a two-day meeting this afternoon, where they will take fresh stock of the nation’s economic and financial conditions. So far, barometers suggest the worst recession since World War II is ending, and that the economy has started to grow again—or will soon.
With the economy turning a corner, the Fed also will weigh whether consumer lending programs intended to ease the recession and stem the financial crisis should be extended. The Fed is widely expected to hold a key bank lending rate at a record low near zero today. The central bank also is expected to renew a pledge to hold that rate there for an “extended period.” It has leeway to do this because the Fed believes inflation will stay low for a while.
Economists predict the Fed will leave its target range for its banking lending rate between zero and 0.25% through the rest of this year. The rationale: super-low lending will spur Americans to spend more, which would support the economy.
