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Fed keeps key interest rate on ice

By Mark Hamrick · Bankrate.com
Wednesday, January 30, 2013
Posted: 2 pm ET

The Federal Reserve's monetary policymaking group will keep interest rates at superlow levels in hopes of driving down the unemployment rate.

The Federal Open Market Committee is sticking with a target for the benchmark federal funds rate of between zero percent and 0.25 percent. One result of the policy is that the nation's mortgage rates remain near record lows. In turn, home sales have improved over the past year, and a number of key stock market indicators are at, or are approaching, record highs.
Ben Bernanke

The central bank has said that low rates will be appropriate as long as the unemployment rate remains above 6.5 percent. In December, the jobless rate was 7.8 percent.

The Fed pledges to continue buying $40 billion a month of mortgage-backed securities as well as a nearly equal amount of longer-term Treasury bonds aiming to help the economy. While some critics of the Federal Reserve say it is flirting with the ignition of inflation, the statement notes that inflation should remain at or below its 2 percent target.

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