WASHINGTON (MarketWatch) — The Federal Reserve on Tuesday expressed much more concern about the economic outlook and said it would hold interest rates at ultra-low levels “at least” through mid-2013, the first time it’s put a timeframe on the duration.
The action brought strong dissent, as Dallas Fed President Richard Fisher, Minneapolis Fed President Narayana Kocherlakota and Philadelphia Fed President Charles Plosser objected to the specific time reference instead of the old language of holding rates low for “an extended period of time.”
The last time there were three dissents was in November 1992 under former Federal Reserve Chairman Alan Greenspan.
The current chief, Ben Bernanke, led seven voters in favor of the decision, which came as the central bank said it expects a much slower pace of recovery than what it anticipated during the last meeting in late June.
“The FOMC now expects a somewhat slower pace of recovery over coming quarters than it did at the time of the previous meeting and anticipates that the unemployment rate will decline only gradually” from the July level of 9.1%, the statement said.
“Moreover, downside risks to the economic outlook have increased,” the statement said.
The Fed also indicated that it “discussed the range of policy tools available to promote a strong economic outlook recovery in a context of price stability” and said it’s prepared to employ the tools as appropriate. That could mean buying more bonds, or lengthening the duration of the debt it holds, Bernanke told Congress in July.