In an unusual step, the Federal Reserve vowed Tuesday to keep interest rates low for at least the next two years.
The Fed said it’ll keep its key benchmark interest rate near zero through mid-2013. The Fed’s commitment was welcome news to many in the real estate industry who see it as a positive move for the housing industry, allowing buyers more time to take advantage of ultra low mortgage rates.
The Fed said in a statement following its regular policy-setting meeting Tuesday that the overall economy has grown “considerably slower” than it expected and that consumer spending “has flattened out.” Some economists in recent days have expressed concerns that the U.S. is heading for a double-dip recession.
Fed officials “are very nervous about the economy,” says Mark Zandi, chief economist at Moody’s Analytics. “This is unprecedented for the Fed to indicate they are ready to keep rates low for two more years.”
Still, the Fed continues to forecast a moderate pick-up in growth for the economy in the second half of the year.