Federal Reserve Bank of Cleveland President Sandra Pianalto said the central bank is seeking to keep interest rates low because the U.S. economy hasn’t fully recovered from a recession two years ago.
“As we are all too painfully aware, the U.S. economy is still struggling to recover from the great recession,” Pianalto said in Akron, Ohio. “This accommodative monetary policy stance we have is about keeping interest rates low so businesses can borrow” to increase investment and hiring.
Chairman Ben S. Bernanke told Congress last week the Fed could take further action to aid a recovery that’s “close to faltering” with unemployment at or above 9 percent since April. The European debt crisis, political haggling in the U.S. and a plunge in stock prices have led to a drop in consumer and business confidence that may keep hurting spending and hiring.
“Our policy decisions are driven by one thing: to get our economy back on track,” Pianalto said to the University of Akron College of Business Administration. The Fed is doing what it can to encourage stronger growth, she said.
Policy makers voted Sept. 21 to push down mortgage and other loan rates in an effort to spur growth and employment. The Fed plans to extend maturities of the Treasuries in its portfolio by buying $400 billion of long-term debt and selling an equal amount of shorter-term securities.
“I am fully supportive of the actions the FOMC has taken and feel we are running the appropriate monetary policy based on the outlook we have for both growth and inflation,” Pianalto said in a response to a question from the audience after the speech.