WASHINGTON (AP) -- The economy still needs to do better. That's the conclusion of the Federal Reserve, in deciding today against reducing its stimulus for the U.S. economy.
In a surprise move, the Fed said it will keep buying $85 billion a month in bonds while it awaits conclusive evidence that the economy is strengthening.
Chairman Ben Bernanke says, "Conditions in the job market today are still far from what all of us would like to see."
In a statement, the Fed said the economy is growing moderately, and that some indicators of the job market have shown improvement. But it noted that rising mortgage rates and government spending cuts are restraining growth. The statement said the rise in interest rates "could slow the pace of improvement in the economy and labor market" if it continues.
The Fed also lowered its economic growth forecasts for this year and next year slightly, which may reflect its concerns about interest rates.
Stocks surged after the Fed released the statement at the end of its two-day policy meeting. Many investors had taken it for granted that the Reserve would ease back on its bond-buying program.