Federal Reserve Statement: Modest Economic Recovery

The FED released a statement today, in which they indicate that the Committee anticipates a gradual return to higher levels of resource utilization in a context of price stability, although the pace of economic recovery is likely to be more modest in the near term than had been anticipated.

What is meant with "resource utilization"? The Business spending on equipment and software is already rising. The other factors, investment in nonresidential structures, hiring and housing starts and bank lending are expected to recover soon.

The federal funds rate will be kept at a rate of 0 to 1/4 percent for the near future.The economic recovery will be supported by keeping the current level of bonds and by reinvesting pricipal payments received in longer-term Treasury securities, said the statement.

Marketwatch.com reports, that U.S. stocks finished lower on Tuesday, though well off their worst levels of the session, as investors weighed the Federal Reserve's move to use mortgage-bond proceeds to buy more Treasury notes to boost a slowing economy.

Bloomberg reports, that Gold prices rallied in New York, erasing an earlier drop, after the Federal Reserve said it would buy more U.S. government debt. Over the last 12months gold had gained over 25%.