Fed Sees Both Benefits and Risks in New Moves

Ben Bernanke (Photo credit: trackrecord)

New York TimesFed Sees Both Benefits and Risks in New MovesNew York TimesWASHINGTON — The argument for the Federal Reserve to introduce another round of stimulus, and its reasons for hesitation, can both be summarized by a single number: 3.53 percent, the average interest rate last week on a 30-year mortgage. The cost of mortgages and other kinds of loans remain well above zero, a chief reason that many Fed officials are confident the central bank still has some power to increase the pace of economic growth by continuing to reduce interest rates. But those rates also are lower than they ever have been before, raising questions about how low they can go, and about the eventual consequences of such huge and enduring distortions to the normal workings of the financial marketplace.
Top Fed officials are coming to the conclusion that the economy is not growing fast enough to reduce the nation’s high rate of unemployment, and several members of the Fed’s policy-making committee have said additional action is needed if the economy is “stuck in the mud,” as Ben S. Bernanke, the Fed chairman, has said. ... Continue to read.

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