US Federal Reserve sticks with low interest rates

The U.S. economy is getting stronger, but interest rates will likely remain near record lows through late 2014, the Federal Reserve said Tuesday in its latest monetary policy statement.

The Fed echoed its sentiments from January, saying the US economy is “expanding moderately,” and said that it expect interest rates to remain near zero for at least another two years. 

Fed watchers hadn’t been expecting the US central bank to make any major changes after its one-day meeting, but have been paying close attention to the Fed’s interpretation of recent economic news.

"Analysts are looking to the Fed's two-day meetings in April and June for decisions about any new directions for policy,” Reuters said. Fed chairman Ben Bernanke also is scheduled to hold news conferences after the meetings.

The Fed in its statement Tuesday said it expects the US unemployment rate, at 8.3 percent now will continue falling.

“The core issue policymakers face is determining when the labor market will be strong enough for them to scale back their support for the economy,” the Associated Press said.

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The Fed said a rise in inflation resulting from higher oil and gas prices will be temporary and said it isn’t expecting inflation to spike in the longer-term.

Still, Reuters suggested inflation hawks may have a strong argument. "Even core consumer prices, which strip out volatile food and energy costs, rose by 2.3 percent over 12 months, the fastest pace in more than two years," the news agency noted. 

US interest rates have been hovering near record lows for years as the US central bank has tried to stimulate growth by making it cheaper for businesses and consumers to borrow. 

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