Washington Extra – Easy money
Some great news for all you borrowers today from the Fed. Interest rates are likely to remain around zero until at least late 2014. That’s later than previously expected, and to put things in perspective, it’s nearly two years into the term of the president who will be elected in November.
What it tells us is that the economy is still very vulnerable. Ben Bernanke said as much today: “I don’t think we’re ready to declare that we’ve entered a new, stronger phase at this point.” He left the door wide open to further Fed stimulus via bond purchases.
And Bernanke was almost apologetic about what this interest rate outlook means for another large swathe of the population: the savers. Take Maggie Smith, not the actress but a 74-year-old from New Jersey who watches her interest income on savings stagnate while home and car costs go up. After more than five years of rock-bottom rates, it’s no wonder she feels like she’s “being punished” for being prudent.
Here are our top stories from Washington…
Federal Reserve Chairman Ben Bernanke signaled the U.S. central bank may consider further monetary easing, after the central bank announced interest rates would remain near zero until late 2014. Bernanke also suggested the Fed might be willing to tolerate inflation above its newly unveiled official target of 2 percent if it means putting a dent in high unemployment.
For more of this story by Pedro da Costa and Mark Felsenthal, read here.
For a snap analysis by Mark Felsenthal, read here.
Insight: Today it pays to owe money, while U.S. savers suffer
Sometimes Maggie Smith worries that she may outlive her savings.”It’s an uncomfortable feeling to realize that everything is going up except your income,” said the 74-year-old from New Jersey. Rising home and car insurance costs forced her to dip into savings which have been earning less than 1.0 percent. That isn’t likely to change for some years. The Federal Reserve said it is likely to keep its key interest rate near zero until late 2014.
For more of this story by Karen Brettell and Steven C. Johnson, read here.
President Barack Obama threw red meat to his political base on Tuesday with a promise to do the nearly impossible: solve the problem of widening U.S. income inequality. Faced with the very real possibility of losing the White House in November, Obama used his State of the Union address to demand a tax increase for millionaires and launch an aggressive campaign arc built upon economic fairness.
For more of this story by Jeff Mason, read here.
Obama tax ideas face long odds ahead of election
President Barack Obama’s bid to get millionaires and multinational companies to pay more taxes may play well with many voters but it faces long odds in the deadlocked U.S. Congress. Obama used his State of the Union speech on Tuesday to press the case for a new minimum 30 percent tax on Americans earning more than $1 million a year and for tougher treatment of corporations that move jobs out of the United States.
For more of this story by Kim Dixon, read here.
Obama saw window of opportunity to free hostages
When President Barack Obama mysteriously congratulated his defense chief while making his way through the crowd awaiting the State of the Union address, the secret hostage rescue mission in Somalia was still being wrapped up. After days of planning, a U.S. assault team — including some forces from the Navy SEAL unit that killed Osama bin Laden last year — freed the American and Danish hostages and killed the kidnappers.
For more of this story by Phil Stewart and David Alexander, read here.
A Republican proposal in the U.S. House of Representatives to strip President Barack Obama’s authority to rule on the permit for the Keystone XL Canada-to-Texas oil pipeline raises serious legal issues, a top State Department official said. Obama denied TransCanada’s application for the oil pipeline on Jan. 18 because he said there was not enough time for the State Department to review an alternate route that would avoid a sensitive aquifer in Nebraska within a 60-day window set by Congress.
For more of this story Roberta Rampton, read here.
Washington veteran tops list for U.S. antitrust post
William Baer, a widely respected antitrust veteran, is the White House’s top choice to head the Justice Department’s antitrust division, legal sources said. Baer, a former chief of the Federal Trade Commission’s competition division with wide experience in private practice, currently leads the antitrust division of the law firm Arnold and Porter LLP.
For more of this story by Diane Bartz, read here.
Mixed reviews for Obama speech among Davos mighty
The rich and powerful were divided at their annual huddle on over Barack Obama’s threat to raise their taxes, with some saying it could hurt growth, but others arguing he was right to address capitalism’s imbalances. Obama’s State of the Union address was delivered on the eve of World Economic Forum in the Swiss ski resort of Davos, which found many of the world’s titans of industry and politics in reflective mood, focusing on whether capitalism needs to be fairer to survive.
For more of this story, read here.
For more stories from our Washington correspondents visit www.reuters.com and stay informed.
Photo Credits: REUTERS/Larry Downing (Bernanke at news conference); REUTERS/Jason Reed (Obama in Arizona); REUTERS/TransCanada Corp/Handout (Keystone pipeline under construction in North Dakota)