The Fed remains upbeat about the U.S. economy, despite continued weakness in overseas economies. Bobbi Rebell reports.
The economy is pretty good here in the U.S., and that's what matters most, it seems, to the central bank keeping watch. The Federal Reserve taking a clearly upbeat tone in its latest statement, largely looking past overseas weakness, saying "Based on its current assessment, the Committee judges that it can be patient in beginning to normalize the stance of monetary policy." Stuart Hoffman, chief economist at PNC Financial: SOUNDBITE: STUART HOFFMAN, CHIEF ECONOMIST, PNC FINANCIAL SERVICES GROUP (ENGLISH) SAYING: "They did talk about international developments as something that would influence their policy, and, I think, that's where some people in the market, particularly the bond market, kind of saw that as dovish, because bonds have rallied like crazy since the statement, thinking that, well, maybe the Fed is signaling they are going to hold off raising rates because of the concern about the strong dollar and the international development. But that's not how I read it. I read the statement as saying we are still on schedule for the summer." The Fed pointed to lower energy prices, saying they have given consumers more buying power. The central bank acknowledged inflation had declined further below its two percent target, and that market-based price gauges had fallen substantially - a more negative assessment than in December. On the news, the S&P 500 stock index turned negative after the statement was released, while the yield on the 30-year U.S. Treasury bond fell to a record low. The dollar strengthened against a broad index of foreign currencies. SOUNDBITE: STUART HOFFMAN, CHIEF ECONOMIST, PNC FINANCIAL SERVICES GROUP (ENGLISH) SAYING: "There is still international demand for U.S. treasuries, where you get a better return than the counterparts around the globe, and you, maybe you're buying into a stronger currency. So I don't know where the floor is, but, apparently, maybe we haven't reached it yet. I just wonder how long rates can stay this low, if and when the Fed does start raising rates in the second half of this year." The statement, which was unanimous, removed the reference to keeping rates near zero for "a considerable time," but did say "for some time".