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Why worry? Less aid by Fed would point to recovery

May 24, 2013 • Business, National News


FILE – In this Wednesday, May 22, 2013, file photo, Federal Reserve Chairman Ben Bernanke listens as he testifies on Capitol Hill in Washington, before a Senate Joint Economic Committee hearing on “The Economic Outlook” . Investors have grown nervous that the Federal Reserve will scale back its efforts to boost the U.S. economy sooner than many expected. (AP Photo/Manuel Balce Ceneta)

WASHINGTON (AP) — Investors have grown nervous that the Federal Reserve will scale back its efforts to boost the U.S. economy sooner than many expected.

Yet almost lost in the anxiety that gripped the stock market this week is that whenever the Fed slows its drive to keep interest rates low, it will be cause for celebration: It would mean policymakers think the economy is strong enough to accelerate with less help from the Fed.

“We should be wishing for higher interest rates,” says Kevin Logan, HSBC’s chief U.S. economist. “It would be a sign of a more healthy economy.”

Over the past five years, the Fed has acted aggressively to try to boost the economy. Among other steps, it cut short-term interest rates to record lows and said it planned to keep them there at least until unemployment falls to 6.5 Login to read more

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