The Federal Reserve is continuing to wind down its monthly bond-buying program, but it appears to be waiting for the economy to improve more before boosting short-term interest rates.
The central bank said yesterday it will keep short-term interest rates low “for a considerable time,” the next major decision for the Federal Open Market Committee.
“There’s a bit of a puzzle about where things go from here,” said Paul Edelstein, an economist with IHS Global Insight in Lexington. “It’s about when, how quickly and how far to raise interest rates.”
The national unemployment rate has continued to drop and inflation has risen — two key indicators the Fed has long said are crucial to the economy’s recovery — but Chair Janet Yellen said earlier this month she had concerns about slow wage growth and the number of people who don’t show up in unemployment statistics but are still looking for a job.
“A range of labor-market indicators suggests that there remains significant underutilization of labor resources,” the FOMC said in its statement yesterday.
For more than five years, the short-term interest rates have been near zero.
“They are in somewhat of a holding pattern,” Edelstein said. “The robustness of the labor market is a key issue.”
