Fed to keep rates low through 2014

Washington - The Federal Reserve on Wednesday said it would keep its benchmark interest rate at "exceptionally low" levels until at least late 2014, extending the forecast for keeping rates at historic lows beyond the mid-2013 timeline announced late last year.

The central bank left its benchmark interest rate unchanged, near zero.

Fed Chairman Ben Bernanke said the central bank thought it was too soon to say the economy had entered a stronger phase, despite some positive economic data in recent months.

The central bank has kept its key federal funds rate at zero to 0.25 per cent since December 2008, during the depths of the global financial crisis.

In a statement, the Fed forecast "modest" growth in coming quarters and said unemployment, which currently stands at 8.5 per cent, would decrease "only gradually."

It also lowered its projections for economic growth for the year, anticipating gross domestic product growth of 2.2 to 2.7 per cent, down from estimates of 2.5 to 2.9 per cent in November. It also predicted unemployment rates of 8.2 to 8.5 per cent for the year, an improvement over the 8.5 to 8.7 per cent in November projections.

"There’s certainly been some encouraging news recently," Bernanke said, noting improvements in unemployment and consumer sentiment among others, but noted problems remained, including "headwinds emanating from Europe, coming from the slowing global economy and some other factors as well." //DPA