国际英语新闻:Fed announces new steps to boost U.S. economy

WASHINGTON, Dec. 12 (Xinhua) -- After its final policy meeting of this year, the U.S. Federal Reserve on Wednesday announced to continue pumping money into the economy by buying assets and hold its short-term rate near zero until the unemployment rate drops below 6.5 percent, an aggressive move to stimulate economic growth and job creation.

But some economists cautioned that a long-period of historically-low interest rate since the end of 2008 and large asset-buying programs have underpriced credit and increased risk taking, fueling asset bubbles in the global stock and commodity markets, but could not provide a strong boost to U.S. business hiring and economic recovery.

MODERATE GROWTH OUTLOOK

U.S. economic activity and employment have continued to expand at a "moderate pace" in recent months, despite weather-related disruptions. Although the unemployment rate has declined since the summer, it remains elevated, stated top Fed policymakers.

Household spending has continued to advance, and the housing sector has shown further signs of improvement, but growth in business fixed investment has slowed, the Fed said in a statement issued after a two-day policy meeting of the Federal Open Market Committee (FOMC), the Fed's powerful interest-rate setting panel.

"The Committee remains concerned that, without sufficient policy accommodation, economic growth might not be strong enough to generate sustained improvement in labor market conditions," added the Fed.

The FOMC participants on Wednesday slightly lowered their outlook for U.S. economic growth next year, predicting U.S. economy to expand by 2.3 percent to 3.0 percent in 2013, as against the range of 2.5 percent to 3.0 percent projected in September.

At a a press conference after the FOMC meeting, U.S. Federal Reserve Chairman Ben Bernanke warned that the uncertainty caused by the negotiation between Democrats and Republicans over the " fiscal cliff" was hurting U.S. business confidence and economic growth.

CLEAR THRESHOLDS

In an uNPRecedented move, the Fed decided to keep the target range for the federal funds rate at zero to 0.25 percent, and anticipates that this exceptionally low short-term rate will be appropriate as long as the unemployment rate remains above 6.5 percent and inflation is projected to be no more than 2.5 percent "between one and two years ahead."

This is the first time that the Fed has set explicit unemployment and price thresholds for its monetary policy guidance to better explain its policy intentions to the market.

The new step was to make monetary policy "more transparent and predictable to the public," Bernanke told reporters.

Fed policymakers on Wednesday forecast the U.S. unemployment rate to be no lower than 7.4 percent in 2013 and to be higher than 6.8 percent by the end of 2014, which means that the central bank might adopt the ultra-loose monetary policy through 2014.