Fed chair says economy still hurting, sees no need to raise short-term interest rates

WASHINGTON — The U.S. economy still isn’t healthy enough to grow at a consistently strong pace without the Federal Reserve’s help.

That was the message Fed Chair Janet Yellen sent Wednesday after the central bank ended a two-day policy meeting.

Yellen made clear that despite a steadily improving job market and signs of creeping inflation, the Fed sees no need to raise short-term interest rates from record lows anytime soon.

Her remarks followed a statement from the Fed that it would further slow the pace of its long-term bond purchases, which have been intended to keep long-term loan rates low. But the Fed offered no clear signal about when it will start raising its benchmark short-term rate.

Stock investors appeared pleased with the message that rates would remain low.

Major indexes surged more than half a percentage point, with the Standard & Poor’s 500 index reaching a record.

The S&P 500 rose 15 points, or 0.8 percent, to close at 1,957 Wednesday.

And the yield on the 10year Treasury note dipped to 2.59 percent from 2.65 percent late Tuesday.

“The last thing that Janet Yellen wants is for the market to think she’s anywhere close to tightening,” said David Robin, managing director at the brokerage Newedge. “She nailed it.”

Most economists think a rate increase is at least a year away despite signs of rising inflation.