- The Washington Times - Wednesday, April 28, 2010

WASHINGTON (AP) — The Federal Reserve sounded a more confident note Wednesday that the economy is strengthening but pledged to hold rates at record lows to make sure it gains traction.

Wrapping up a two-day meeting, the Fed in a 9-1 decision retained its pledge to hold rates at historic lows for an “extended period.” Doing so will help energize the recovery.

The Fed offered a more upbeat view of the economy even as it noted that risks remain. It said the job market is “beginning to improve,” an upgrade from its last meeting in mid-March. It observed then that the unemployment situation was merely “stabilizing.”

The Fed also noted that consumer spending has “picked up,” an improvement from its last observation that spending was expanding at a “moderate pace.”

Even with the improvements, the Fed said there was reason to be cautious.

High unemployment, sluggish income gains and tight credit is still dampening consumer spending, a major contributor to economic activity. Commercial real estate remains fragile. And though housing activity has edged up, it is still at depressed levels. Bank lending continues to shrink.

Investors showed little reaction to the Fed’s statement. The Dow Jones industrial average was relatively unchanged after the announcement.

Prices for Treasurys continued to slip following the announcement. The yield on the 10-year note, which moves inversely to its price, edged up to 3.77 percent, from 3.75 percent just before the announcement.

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