The Federal Reserve will continue its program of purchasing $85 billion in securities and will leave the target interest rate for federal funds untouched to support the U.S. economy, the U.S. central bank said in a policy update issued Wednesday afternoon.
Here's a summary of the state of the U.S. economy from the Fed, which concluded two days of meetings today:
OK, Scott just made clear economic issues have some competition for top billing at the G 8 Summit in Northern Ireland. We do, though, want to drill down into one economic question this morning, and that's why interest rates here at home are going up. The bond market has pushed them to the highest levels in 15 months, and that includes mortgage rates.
Let's turn, as we often do, to David Wessel. He's economics editor of The Wall Street Journal. David, good morning.
Mortgage rates have seen a relatively sharp rise this month. The average 30-year fixed-rate loan hit 4 percent earlier in June — a big jump from the record lows of recent years. Some investors are now concerned that the housing recovery could be stifled if rates continue to rise quickly.
The Federal Reserve has two main missions: to maximize employment and minimize inflation. Right now, there are few, if any, signs that prices for goods are spiking, and the job market is still crawling out of its long, deep slump.
NPR's business news starts with pension problems for Illinois.
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MONTAGNE: The credit rating for the state of Illinois has taken another step closer to junk bond status. Illinois already had the lowest credit rating in the nation before it was downgraded again this week by Moody's and Fitch. The state legislature adjourned last week without addressing a $100 billion pension shortfall.
So as NPR's David Schaper reports, the governor is calling lawmakers back.
NPR's Uri Berliner is taking $5,000 of his own savings and putting it to work. Though he's no financial whiz or guru, he's exploring different types of investments — alternatives that may fare better than staying in a savings account that's not keeping up with inflation.