Article Summary Concerned About Slow Economic Growth, the Fed Announced in September

Article Summary
Concerned about slow economic growth, the Fed announced in September 2013 that it would postpone winding down its $85 billion a month bond purchasing program which has been a key component of its monetary stimulus package. Fed Chairman Ben Bernanke would not commit to a timeline for reducing the bond purchases, stating that the program was "not on a preset course." The Fed's forecasts of economic growth have been lowered for 2013 and 2014, and the Fed does not expect to raise interest rates until 2015. Since late 2008, the Fed has held its benchmark interest rate near zero, while its balance sheet has tripled to more than $3.6 trillion. The Fed also stated that so long as inflation did not become a threat, it would not raise interest rates until the unemployment rate dropped to 6.5 percent. At the time of the announcement, the unemployment rate was 7.3 percent.
Source: Pedro da Costa and Alister Bull, "Fed Surprises, sticks to stimulus as it cuts growth outlook," Reuters, September 18, 2013.

-Refer to the Article Summary.When the Fed announced it did not expect to raise its benchmark interest rate until 2015,it was referring to the

A) prime rate.
B) federal funds rate.
C) long-term real rate of interest.
D) required reserve rate.

Correct Answer:

Verified

Unlock this answer now
Get Access to more Verified Answers free of charge

Access For Free