) -- The
policy-making arm left its target fed funds rate unchanged at the zero to 0.25% level and said economic conditions continue to warrant the buying of $600 billion of longer-term Treasury securities through mid-2011.
Although U.S. stock indices have been hitting two-year highs recently on improving economic data and expectations for an extension to the Bush-era tax rates, the Federal Open Market Committee made no changes to its bond-purchase program, citing the high unemployment rate and muted inflation pressures.
"The economic recovery is continuing, though at a rate that has been insufficient to bring down unemployment," the committee said in its
"Although the Committee anticipates a gradual return to higher levels of resource utilization in a context of price stability, progress toward its objectives has been disappointingly slow," it added.
The committee maintained language suggesting that economic conditions would continue to warrant exceptionally low rates for an extended period and reiterated its promise to continue to monitor economic developments and use policy tools to keep inflation at levels in line with its mandate.
On Tuesday, the Department of Labor said core wholesale prices increased 0.3% in November, compared with market expectations for a 0.2% uptick and a decline of 0.6% in October. The consumer price index, which is the most widely accepted measure of inflation, will be released Wednesday. Economists expect the core rate to inch 0.1% higher in November after remaining unchanged in the prior month.
Also on Tuesday, better-than-expected November retail sales helped push the
Dow Jones Industrial Average
to its highest level in two years at 11,514.08. The Dow was last up by 54 points, or 0.5%, at 11,483.
As usual, Kansas City Fed President Thomas Hoenig was the only member to vote against the policy. Hoenig feared that continued easy money policy amid an improving economy "would cause an increase in long-term inflation expectations that could destabilize the economy."
--Written by Melinda Peer in New York
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