Federal Reserve officials said Wednesday that their benchmark interest rate will stay low until at least late 2014, and they anticipate unemployment remaining high and inflation "subdued."
"The committee expects to maintain a highly accommodative stance for monetary policy," the Federal Open Market Committee said in a statement released in Washington. "Economic conditions - including low rates of resource utilization and a subdued outlook for inflation over the medium run - are likely to warrant exceptionally low levels for the federal funds rate at least through late 2014."
The Fed extended its previous pledge to keep rates low at least until the middle of 2013 as more than two years of economic growth have failed to push unemployment below 8.5 percent.
"What they're doing is setting the table for some sort of additional monetary easing," said Scott Minerd, chief investment officer in Santa Monica, Calif., for Guggenheim Partners. "The changes in the statement from last month de-emphasize growth."
Fed Chairman Ben Bernanke, speaking at a news conference after the statements, said that the option of further large-scale bond purchases is still "on the table."
"If inflation is going to remain below target for an extended period and employment progress" is very slow, then "there is a case" for additional monetary stimulus, he said.
The Fed lowered its forecast for growth this year to 2.2 percent to 2.7 percent, down from a projection of 2.5 percent to 2.9 percent in November.
In a separate statement of its long-range goals and strategy, the Open Market Committee specified a 2 percent goal for long-term inflation, as measured by the annual change in the price index for personal consumption expenditures.
"Communicating this inflation goal clearly to the public helps keep longer-term inflation expectations firmly anchored, thereby fostering price stability," the panel said in a statement. It also enhances "the committee's ability to promote maximum employment in the face of significant economic disturbances."
The Fed said it would continue to extend the average maturity of its $2.6 trillion securities portfolio, a move dubbed "Operation Twist." The Fed also maintained its policy of reinvesting maturing housing debt into agency mortgage-backed securities.
Fed officials are still concerned about the sustainability of consumer spending as savings rates fall and as disposable income adjusted for inflation shrinks, said Roberto Perli, managing director of policy research at International Strategy and Investment Group in Washington.
A deeper crisis in Europe is another cause for concern. The International Monetary Fund on Tuesday cut its forecast for global growth, saying the euro crisis threatens the world economy.
For the United States, "the top risks are unemployment and Europe," said Drew Matus, senior U.S. economist at UBS Securities and a former New York Fed staff member.
How much the Fed expects the economy to grow this year, down from its forecast in November of 2.5 percent to 2.9 percent.
8.2% Fed estimate for unemployment this year, better than its earlier forecast of 8.5 percent. December's rate was 8.5 percent.
2% The Fed's target for long-term inflation.