Federal Reserve keeps stimulus, says taxes and cuts have hurt

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Unemployment for the eurozone is 12.1 percent, and the ECB predicts the euro economy will shrink 0.5 percent in 2013.

Japan’s central bank has acted to flood its financial system with more money to try to raise consumer prices, encourage borrowing and help pull the world’s third-largest economy out of a prolonged slump. Economists say Japanese consumers will spend more if they know prices are going to rise.

The Bank of Japan has kept its benchmark rate between zero and 0.1 percent to try to stimulate borrowing and spending.

The Fed’s goal is to keep price changes from hurting the economy. This could occur if inflation raged out of control or if the opposite problem — deflation — emerged. Deflation is a prolonged drop in wages, prices, and the value of such assets as stocks and houses.

The United States last suffered serious deflation during the Great Depression of the 1930s, but Fed policymakers worry more about the threat of deflation any time prices go lower than 2 percent.

The Fed’s action Wednesday was supported on an 11-1 vote. Esther George, president of the Kansas City regional Fed bank, dissented for a third straight meeting. The statement said Ms. George remained concern that the Fed’s aggressive stimulus could heighten the risk of inflation and financial instability.

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