FOMC keeps interest rate near zero

Fox News reported that the Federal Reserve left its target for short-term interest rates very close to zero, saying the economy was not strong enough to support higher borrowing costs.

The Federal Reserve said the economic recovery is continuing but slower than the Federal Open Market Committee expected. The Fed is optimistic, however, that both unemployment and
inflation will improve later on this year.

The New York Times reported that since 2008, the central bank has worked towards stopping the financial crisis and restoring growth by holding the short-term interest rates near zero, and reducing long-term rates through the purchase of mortgage-backed securities and Treasuries.

On June 30, the program to buy $600 billion in Treasury securities in hopes to drive consumer and business spending will end.

The news source cited studies finding the Fed's programs to spur the economy have had little effect. Despite rising stock prices, easy loans for corporations and low mortgage interest rates, unemployment is high and home sales are low.

According to The New York Times, the economic expansion has repeatedly progressed slower than the Fed's predictions, as both the Fed and economic forecasters underestimated the lingering effects natural disasters, commodity prices and consumer confidence have had on the economy.  

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