TheBakersfieldCalifornian.com

WASHINGTON -- The Federal Reserve went further than ever Wednesday to assure consumers and businesses that they'll be able to borrow cheaply well into the future.

The Fed pushed back the date for any likely increase in its benchmark interest rate by at least a year and a half, until late 2014 at the earliest. It said record-low rates are still needed to help boost an improving but still sluggish economy.

The central bank also reduced its outlook for economic growth this year but is slightly more optimistic about the unemployment rate.

It expects the economy to grow between 2.2 percent and 2.7 percent this year. That's down from its November's forecast of between 2.5 percent and 2.9 percent.

But it sees unemployment falling as low as 8.2 percent this year, better than its earlier forecast of 8.5 percent. December's rate was 8.5 percent.

The quarterly updated forecast also shows that some Fed members wanted to extend the period of record-low interest rates beyond late 2014. The Fed also offered a firmer target for inflation -- 2 percent -- in a statement of its long-term policy goals.

Treasury yields fell on the news that the Fed plans no rate increase until late 2014 at the earliest.

The yield on the five-year Treasury hit an all-time low of 0.76 percent. The yield on the 10-year note sank to 1.95 percent. The 10-year yield had been 2.02 percent just before the Fed made its announcement around 12:30 p.m. EST.

Lower yields could help further reduce mortgage rates and possibly boost stock prices as investors shift out of lower-yielding Treasurys.

Stocks, which had traded lower all day, quickly recovered their losses. The Dow Jones industrial average, which had been down about 60 points before the announcement, was up 43 points in mid-afternoon.

The central bank said in a statement after a two-day policy meeting that the economy is growing moderately, despite some slowing in global growth. It held off on any further bond-buying programs to try to increase growth.

The Fed announced no further bond buying efforts. But it held out the possibility of doing so later. It said it was prepared to adjust its "holdings as appropriate to promote a stronger economic recovery in the context of price stability."

Some economists say that means the Fed will take further action soon.

Julie Coronado, an economist at BNP Paribas, said the Fed is signaling it will boost its purchases of bonds and other assets if growth fails to accelerate, even if the economy doesn't slow.

That is a "very low bar indeed," she wrote in a note to clients.

The Fed described inflation as "subdued." That was a more encouraging description than it offered last month. A more positive outlook on prices gives the Fed more room to keep rates low.