The Federal Reserve announced on Wednesday that it will not change its easy money policy, and presented a more optimistic outlook of the nation's economy.
The agency said in a policy statement, that the economy has been moderately expanding and in order to "support a stronger economic recovery," it will continue purchasing $85 billion bonds and other assets each month until the job market improves.
"Overall, the committee believes the downside risks to the outlook for the economy and the labor market have diminished since the fall, but we will continue to evaluate economic conditions and risks as they evolve," said Federal Reserve Chairman Ben Bernanke at a press conference following the announcement.
But two members of the Federal Open Market Committee dissented against the decision, according to Reuters. Kansas City Fed President Esther George said she was concerned it could hurt the central bank's goal of keeping inflation contained, and St. Louis Fed President James Bullard said the central bank should signal more strongly its willingness to defend its 2 percent goal for inflation, Reuters reported.
Last month, Bernanke suggested that the agency might begin to phase out its $85-billion-a-month asset purchasing policy due to the improving economy — a comment that elicited a feeling of unease in the markets and caused prices for bonds to fall, according to CNN.
Since 2008, the agency has poured $2.5 trillion into the nation's economy through these purchases, as a way to keep interest rates low and to prod economic growth, CNN reported.
The Fed also released its updated economic projections on Wednesday, which point to a quicker drop in the unemployment rate. The agency lowered its unemployment forecasts for this year from 7.5 percent to 7.25 percent, and suggested that it may be as low as 6.5 percent in 2014, according to ABC News. The agency has said it may begin increasing interest rates if that level of unemployment is reached.
But Bernanke stressed at the press conference that the 6.5 percent rate is not an automatic trigger, but rather a threshold. If the unemployment rate falls below 6.5 percent, but inflation is still not a risk, the agency could keep low rates in place, for example.
"Job gains, along with the strengthening housing market, have in turn contributed to increases in consumer confidence and supported household spending," Bernanke said. "However, at 7.6 percent, the unemployment rate remains elevated, as do rates of underemployment and long-term unemployment."
Though the agency has assured that there will not be a sudden exit from its stimulus policy, these efforts may come to an end as early as next year, at which point interest rates will rise, according to ABC News.
"Rates are going higher, we are very close to the day and they are going to rise in a consistent way," Moody's Analytic's Chief Economist Mark Zandi told ABC News. "If you are looking to buy anything that requires a loan, buy it now and lock in a low rate."
In recent days, both the bond and stock markets have sold off in anticipation of a so-called "tapering" of the Fed's stimulus. And while Bernanke did not specifically address any timing, markets did sell off as traders interpreted the sunnier comments on the economy as a sign that rates are headed higher. Stocks have flourished amid historically low interest rates as other investment alternatives have offered less upside promise.