Fed stays steady on monetary policy

The Federal Reserve announced Wednesday that it will maintain its accommodative policy in the face of a slowly improving economy.

The Federal Open Market Committee (FOMC) said it appeared the economy had returned to moderate growth after suffering a brief pause in improvement at the end of 2012. While there have been "signs of improvement" in the labor market, an elevated unemployment rate is still bolstering the case for the Fed to stay the course, the committee added.

By maintaining existing policy, the Fed renewed its commitment to a policy of near-zero interest rates, with an additional $85 billion in bond purchases a month in an effort to further lower long-term borrowing rates and spur on the economy.

In its most recent statement, the FOMC reiterated its stance that it would continue with these policies until the labor market has "improved substantially." The nation's jobless rate is now 7.7 percent.

In economic projections released alongside the new statement, Fed officials predicted the economy would grow between 2.3 and 2.8 percent in 2013 before picking up steam in 2014 to 2.9 to 3.4 percent. However, both of those estimates are down slightly from the Fed's last projections in December.

On the jobs front, the Fed anticipates the jobless rate will decline slightly more in 2013, falling to 7.3 to 7.5 percent. However, it anticipates the jobless rate will fall much more substantially in the coming years, dropping below 7 percent in 2014 and falling perhaps even to 6 percent in 2015.

The Fed had previously announced that it anticipated it would keep interest rates near zero until unemployment dipped below 6.5 percent, assuming inflation remains in check.

Central bank officials anticipate inflation will remain within its targeted range for the foreseeable future, bumping up against its 2 percent threshold potentially in 2014 or 2015.

Eleven members of the FOMC voted in favor of the policy decision, while Esther George, president of the Federal Reserve Bank of Kansas City, was the lone dissenter.