Federal Reserve policymakers kept ultra-low interest rates and stimulus spending in place today amid global crises in the Middle East and Japan and on high but falling unemployment at home.
The Fed held rates at historic lows and stuck to a $600 billion stimulus plan in an effort to spur growth, as it pondered events in the Arab world that have pushed up oil prices and a developing nuclear crisis in quake-hit Japan.
The Fed kept the crisis stimulus in place despite a 'firmer' economic recovery at home - where unemployment eased, consumer spending picked up and businesses grew more optimistic.
'The economic recovery is on a firmer footing, and overall conditions in the labor market appear to be improving gradually,' the Federal Open Market Committee said in a statement. Since the bank last met in January the unemployment rate has fallen to 8.9% from 9.4%.
The Fed waved off concerns of rising prices, which have been fueled by the fighting in Libya that has pushed up the cost of oil. With Americans struggling to pay petrol prices that have risen around 43 cents a gallon in the last month to an average of $3.56, the Fed insisted that core inflation remains in check.
'Commodity prices have risen significantly since the summer, and concerns about global supplies of crude oil have contributed to a sharp run-up in oil prices in recent weeks,' the Fed acknowledged.
'Nonetheless, longer-term inflation expectations have remained stable, and measures of underlying inflation have been subdued,' it added.
While stopping well short of accepting criticisms that inflation is rising too rapidly, that language signaled a slight shift from the central bank. In January Fed members had noted inflation was 'trending downward' versus the 'subdued' rate now seen.
The Fed's measure of inflation excludes volatile food and energy prices, which are often the costs most keenly felt by consumers. But the bank said further economic stimulus was needed to push inflation levels closer to the 2% rate the Fed deems healthy. The bank has predicted inflation will be close to a range of 1.3-1.7% this year.
