WESTPORT, Conn., March 1 (Reuters) - While record low interest rates have cut income for savers, they will ultimately nurse the U.S. economy back to health, increasing returns for savers and investors, a top Federal Reserve official said Thursday.
Federal Reserve Governor Sarah Bloom Raskin said holding rates near zero “may limit the financial returns to saving for a time” but said the Fed’s goal was “to strengthen the economic expansion and, over time, return the economy to sustainable rates of output growth, unemployment, and inflation.”
Ultimately, she said that would lead to higher returns for stocks, real estate, businesses and retirement accounts, where the bulk of household wealth is held.
The Fed has cut interest rates to near zero and said it will likely hold them there through 2014.
Speaking to the Y’s Men’s of Westport/Weston, Raskin acknowledged that the pace of economic expansion would remain slow despite recent improvement in the economy.
Higher gas prices would likely reduce household purchasing power in coming months but probably would not push up inflation expectations or inflation, she said. (Reporting By Steven C. Johnson; Editing by Chizu Nomiyama)