Indeed, the Fed said that “economic recovery is likely to be more modest in the near term than had been anticipated” and said that, once again, economic conditions would warrant low rates “for an extended period.” The lone dissenter from the decision was Thomas Hoenig, who said keeping low rates for an extended period was not warranted.

With a bleak economic picture it will be interesting to see when the Fed will actually begin to raise interest rates, a timetable that has been pushed back again and again over the last year as economic recovery has been slower than expected.

In one of our online exclusives for the July issue, Steve Beckner notes that there’s no end in sight for the Fed’s current monetary policy, due in part to major risk aversion from Europe.  He says most of the Fed’s tough policy decisions will come next year. The experts we spoke with for our interest rate outlook were of the same opinion, saying that rates will not rise until 2011 or even 2012, with Europe and plodding economic recovery in the U.S. as key factors.

Some of Bernanke’s statements echo the thoughts of the analysts we spoke to for our Mid-Year Economic Outlook for the July issue of Futures. Our analysts said jobs recovery would be steady, although rather slow, and offered predictions for the interest rate outlook through the rest of the year. Find out when they expect the Fed to raise interest rates, or whether they think the market will push rates up on its own, in the July issue of Futures, online June 25. And let us know what you think of the likelihood of a recovery by commenting below.

“By mid-year, the U.S. Fed is expected to lead a coordinated round of monetary tightening among major central banks, which will allow the U.S. dollar to recover lost ground and rebuild its tarnished image. The higher U.S. interest rates rise in 2010, the higher the U.S. dollar is likely to gain against the major currencies,” said Michael Woolfolk, senior currency strategist at BNY Mellon.

The outlook for earnings in 2010 is brighter as well. Robert Buckland, chief global equity strategist at Citi, expects a 10% increase in major global stock market indexes.

Perhaps one of the more interesting or controversial statements from the presentation was that of Bob Mc Teer, fellow of macroeconomics at the National Center of Policy Analysis. McTeer said, “Congressional and administration pandering to this new populist fervor from the right has contributed to public underestimation of the success of Fed’s lending and the Treasury’s TARP program, and an overestimation of their costs to taxpayers. Instead, the Fed lending and the Treasury’s support of banks have been successful and are likely to have zero cost to taxpayers.” 

Are we headed for an economic recovery in 2010? And if so, how stable will it be? Leave your thoughts in the comments section below.