WASHINGTON — The Federal Reserve struck an encouraging note Wednesday: It will further cut its bond purchases because the U.S. job market needs less help. And the Fed said the economy had strengthened after it all but stalled during a harsh winter.
The Fed also reaffirmed its plan to keep short-term interest rates low to support the economy "for a considerable time" after its bond purchases end, probably late this year. But it again offered no specific timetable for any rate increase. Most economists expect no rate increase before mid-2015 at the earliest.
Investors liked what they heard. Stocks rose after the Fed issued its statement, and the Dow Jones industrial average closed up 45 points to a record 16,580.
The Fed's guidance on short-term rates conforms to goals that Chair Janet Yellen noted in a speech this month. She said the Fed's rate policies must be flexible enough to meet unexpected economic challenges.
The Fed's description of an economy rebounding from the winter freeze was the only meaningful change it made from the statement it issued in March, after the first meeting that Yellen led after taking over in February.
Wednesday's statement also repeated the theme the Fed sounded in March that even after the job market strengthens and it starts raising rates, it probably will keep rates unusually low to support a still-subpar economy.
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