Fed announces new steps to boost U.S. economy

 WASHINGTON, Dec. 12 (Xinhua) -- After its final policy meeting of this year, the U.S. Federal Reserve on Wednesday announced to continue pumping money into the economy by buying assets and hold its short-term rate near zero until the unemployment rate drops below 6.5 percent, an aggressive move to stimulate¹ economic growth and job creation.

But some economists³ cautioned that a long-period of historically-low interest rate since the end of 2008 and large asset-buying programs have underpriced credit and increased risk taking, fueling asset bubbles in the global stock and commodity markets, but could not provide a strong boost to U.S. business hiring and economic recovery.

MODERATE GROWTH OUTLOOK

U.S. economic activity and employment have continued to expand at a "moderate pace" in recent months, despite weather-related disruptions. Although the unemployment rate has declined since the summer, it remains⁴ elevated, stated top Fed policymakers.

Household spending has continued to advance, and the housing sector⁵ has shown further signs of improvement, but growth in business fixed⁶ investment has slowed, the Fed said in a statement issued after a two-day policy meeting of the Federal Open Market Committee (FOMC), the Fed's powerful interest-rate setting panel.

"The Committee remains concerned that, without sufficient policy accommodation, economic growth might not be strong enough to generate sustained improvement in labor⁷ market conditions," added the Fed.

The FOMC participants on Wednesday slightly lowered their outlook for U.S. economic growth next year, predicting U.S. economy to expand by 2.3 percent to 3.0 percent in 2013, as against the range of 2.5 percent to 3.0 percent projected in September.

At a a press conference after the FOMC meeting, U.S. Federal Reserve Chairman Ben Bernanke warned that the uncertainty⁸ caused by the negotiation⁹ between Democrats¹⁰ and Republicans over the " fiscal¹¹ cliff" was hurting U.S. business confidence and economic growth.

CLEAR THRESHOLDS

In an unprecedented¹² move, the Fed decided¹³ to keep the target range for the federal funds rate at zero to 0.25 percent, and anticipates that this exceptionally low short-term rate will be appropriate as long as the unemployment rate remains above 6.5 percent and inflation is projected to be no more than 2.5 percent "between one and two years ahead."

This is the first time that the Fed has set explicit¹⁴ unemployment and price thresholds for its monetary¹⁵ policy guidance to better explain its policy intentions to the market.

The new step was to make monetary policy "more transparent¹⁶ and predictable to the public," Bernanke told reporters.

Fed policymakers on Wednesday forecast the U.S. unemployment rate to be no lower than 7.4 percent in 2013 and to be higher than 6.8 percent by the end of 2014, which means that the central bank might adopt the ultra-loose monetary policy through 2014.

EXPANDING QE3

The Fed announced that it will purchase longer-term U.S. government debt at a pace of 45 billion U.S. dollars per month starting in January, a move to expand its third-round quantitative¹⁷ easing program, also known as the QE3.

The latest step came ahead of the expiration¹⁸ at the end of this month of "Operation Twist," in which the Fed sells 45 billion dollars of short-term Treasuries¹⁹ and replaces them with the same amount of longer-term government debt.

The current Operation Twist policy has to expire whether Fed policymakers like it or not, because the Fed will run out of short- dated bonds to sell, David Semmens, a senior economist² of Standard Chartered Bank, said in a Wednesday research report.

The central bank in September started to buy agency mortgage- backed securities (MBS) at a pace of 40 billion U.S. dollars per month to bolster²⁰ recovery of the housing market, the so-called QE3.

The new Treasuries-buying program unveiled on Wednesday will be funded by creating new money, further expanding the Fed's 2.9 trillion dollars balance sheet. Starting in January, the total monthly increase in the Fed's balance sheet will pick up speed from 40 billion dollars to 85 billion dollars to drive down long- term borrowing costs.

Since the onset²¹ of the financial crisis, the Fed has completed two rounds of quantitative easing programs, dubbed²² as QE1 and QE2. It has bought more than 2 trillion dollars of U.S. government debt, agency MBS and other assets. These programs have attracted sharp criticism both at home and abroad.

"The Fed is distorting one set of financial markets when trying to fix another set," Philip Suttle, Chief Economist of the Institute of International Finance (IIF), said in a recent interview.

The Fed's balance sheet expansion move will "stimulate risk appetite, as well as capital flows to emerging markets," contended Semmens.

The huge liquidity²³ from central banks is creating another round of liquidity excess and risk-taking activities, echoed Suttle, adding what the United States really needs is triggering easier lending conditions for the private sector and home buyers to bolster economic growth.

1 stimulate   

vt.刺激，使兴奋；激励，使…振奋

参考例句：

• Your encouragement will stimulate me to further efforts.你的鼓励会激发我进一步努力。
• Success will stimulate the people for fresh efforts.成功能鼓舞人们去作新的努力。

2 economist   

n.经济学家，经济专家，节俭的人

参考例句：

• He cast a professional economist's eyes on the problem.他以经济学行家的眼光审视这个问题。
• He's an economist who thinks he knows all the answers.他是个经济学家，自以为什么都懂。

3 economists   

n.经济学家，经济专家( economist的名词复数 )

参考例句：

• The sudden rise in share prices has confounded economists. 股价的突然上涨使经济学家大惑不解。
• Foreign bankers and economists cautiously welcomed the minister's initiative. 外国银行家和经济学家对部长的倡议反应谨慎。 来自《简明英汉词典》

4 remains   

n.剩余物，残留物；遗体，遗迹

参考例句：

• He ate the remains of food hungrily.他狼吞虎咽地吃剩余的食物。
• The remains of the meal were fed to the dog.残羹剩饭喂狗了。

5 sector   

n.部门，部分；防御地段，防区；扇形

参考例句：

• The export sector will aid the economic recovery. 出口产业将促进经济复苏。
• The enemy have attacked the British sector.敌人已进攻英国防区。

6 fixed   

adj.固定的，不变的，准备好的；(计算机)固定的

参考例句：

• Have you two fixed on a date for the wedding yet?你们俩选定婚期了吗？
• Once the aim is fixed,we should not change it arbitrarily.目标一旦确定，我们就不应该随意改变。

7 labor   

n.劳动，努力，工作，劳工；分娩；vi.劳动，努力，苦干；vt.详细分析；麻烦

参考例句：

• We are never late in satisfying him for his labor.我们从不延误付给他劳动报酬。
• He was completely spent after two weeks of hard labor.艰苦劳动两周后，他已经疲惫不堪了。

8 uncertainty   

n.易变，靠不住，不确知，不确定的事物

参考例句：

• Her comments will add to the uncertainty of the situation.她的批评将会使局势更加不稳定。
• After six weeks of uncertainty,the strain was beginning to take its toll.6个星期的忐忑不安后，压力开始产生影响了。

9 negotiation   

n.谈判，协商

参考例句：

• They closed the deal in sugar after a week of negotiation.经过一星期的谈判，他们的食糖生意成交了。
• The negotiation dragged on until July.谈判一直拖到7月份。

10 democrats   

n.民主主义者，民主人士( democrat的名词复数 )

参考例句：

• The Democrats held a pep rally on Capitol Hill yesterday. 民主党昨天在国会山召开了竞选誓师大会。
• The democrats organize a filibuster in the senate. 民主党党员组织了阻挠议事。 来自《简明英汉词典》

11 fiscal   

adj.财政的，会计的，国库的，国库岁入的

参考例句：

• The increase of taxation is an important fiscal policy.增税是一项重要的财政政策。
• The government has two basic strategies of fiscal policy available.政府有两个可行的财政政策基本战略。

12 unprecedented   

adj.无前例的，新奇的

参考例句：

• The air crash caused an unprecedented number of deaths.这次空难的死亡人数是空前的。
• A flood of this sort is really unprecedented.这样大的洪水真是十年九不遇。

13 decided   

adj.决定了的，坚决的；明显的，明确的

参考例句：

• This gave them a decided advantage over their opponents.这使他们比对手具有明显的优势。
• There is a decided difference between British and Chinese way of greeting.英国人和中国人打招呼的方式有很明显的区别。

14 explicit   

adj.详述的，明确的；坦率的；显然的

参考例句：

• She was quite explicit about why she left.她对自己离去的原因直言不讳。
• He avoids the explicit answer to us.他避免给我们明确的回答。

15 monetary   

adj.货币的，钱的；通货的；金融的；财政的

参考例句：

• The monetary system of some countries used to be based on gold.过去有些国家的货币制度是金本位制的。
• Education in the wilderness is not a matter of monetary means.荒凉地区的教育不是钱财问题。

16 transparent   

adj.明显的，无疑的；透明的

参考例句：

• The water is so transparent that we can see the fishes swimming.水清澈透明，可以看到鱼儿游来游去。
• The window glass is transparent.窗玻璃是透明的。

17 quantitative   

adj.数量的，定量的

参考例句：

• He said it was only a quantitative difference.他说这仅仅是数量上的差别。
• We need to do some quantitative analysis of the drugs.我们对药物要进行定量分析。

18 expiration   

n.终结，期满，呼气，呼出物

参考例句：

• Can I have your credit card number followed by the expiration date?能告诉我你的信用卡号码和它的到期日吗?
• This contract shall be terminated on the expiration date.劳动合同期满，即行终止。

19 treasuries   

n.（政府的）财政部( treasury的名词复数 )；国库，金库

参考例句：

• Yields on Treasuries, Bunds and gilts can remain at historically low levels. 美国国债、德国国债和英国国债的收益率仍然可以维持在历史低位。 来自互联网
• Treasuries and gold rose in response but the dollar fell sharply. 接着，国债和黄金的价格上涨，而美元价格则猛跌。 来自互联网

20 bolster   

n.枕垫；v.支持，鼓励

参考例句：

• The high interest rates helped to bolster up the economy.高利率使经济更稳健。
• He tried to bolster up their morale.他尽力鼓舞他们的士气。

21 onset   

n.进攻，袭击，开始，突然开始

参考例句：

• The drug must be taken from the onset of the infection.这种药必须在感染的最初期就开始服用。
• Our troops withstood the onset of the enemy.我们的部队抵挡住了敌人的进攻。

22 dubbed   

v.给…起绰号( dub的过去式和过去分词 )；把…称为；配音；复制

参考例句：

• Mathematics was once dubbed the handmaiden of the sciences. 数学曾一度被视为各门科学的基础。
• Is the movie dubbed or does it have subtitles? 这部电影是配音的还是打字幕的？ 来自《简明英汉词典》

23 liquidity   

n.流动性，偿债能力，流动资产

参考例句：

• The bank has progressively increased its liquidity.银行逐渐地增加其流动资产。
• The demand for and the supply of credit is closely linked to changes in liquidity.信用的供求和流动资金的变化有密切关系。