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 Washington 
 
 On Wednesday at 2:15 p.m., Ben Bernanke will do something that previous Federal Reserve chairmen considered a terrible idea. He will hold a news conference. 
 
 Mr. Bernanke spent much of his academic career arguing that the Fed should be less opaque, and, as chairman, he has put his ideas into action. Now it’s time for those of us in the media to hold up our end of bargain. In the spirit of democratic accountability, we should ask hard questions — and we shouldn’t let him get away with the evasions and half-answers that members of Congress too often allow Fed chairmen during their appearances on Capitol Hill. 
 
 One question more than any than other is crying out for an answer: Why has Mr. Bernanke decided to accept widespread unemployment for years on end, even though he believes he has the power to reduce it? 
 
 The Fed’s own forecasts suggest that the unemployment rate won’t fall below 5 percent for perhaps another five or six years. Mr. Bernanke believes the Fed “retains considerable power” to reduce unemployment faster, despite the fact that its benchmark interest rate is zero, as he’s said before. Yet he has been hesitant to use that power. 
 
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 He is in a tough spot, to be fair. Several other voting members of the Fed’s monetary policy committee — and some prominent members of Congress — oppose aggressive action, because they worry it will set off inflation. But these critics always worry about inflation. They have been wrong again and again over the last two years. More important, they don’t have enough power to keep Mr. Bernanke from pursuing the policy he thinks is best. 
 
 So the Fed’s decision to permit high unemployment for an extended period rests on his shoulders. 
 
 As he has explained many times, the Fed has alternatives. It could announce that it would keep its benchmark rate at zero for a few years, which would probably hold down long-term rates. It could say that it was comfortable with higher inflation for a limited period of time, given how low inflation has been since 2007 and how high unemployment is. Above all, Mr. Bernanke could make clear that he considers years of widespread unemployment to be unacceptable. 
 
 He has not done so, and he has yet to offer a satisfying rationale. 
 
 Instead, he has said that more aggressive action brings risks. And it does. Low interest rates have the potential to spark inflation, by enticing millions of households and businesses to borrow money and causing the economy to overheat. Higher inflation could, among other things, increase borrowing rates for the United States government and worsen the deficit. 
 
 But it’s worth keeping in mind that just about every decision involves some risk. Simply stating that more aggressive action brings risks is not a good argument against that option. 
 
 Economists sometimes like to describe choices in terms of a concept known as expected value. The expected value of a decision is the odds of each possible outcome multiplied by the benefit (or cost) of that outcome. If you make an investment that has a 90 percent of breaking even and a 10 percent chance of earning you $5,000, the expected value is $500. 
 
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 Now extend this concept to the Fed’s decision. The consequences of being too aggressive and creating an inflationary spiral are undeniably serious. But the odds still appear quite low. Put the two together, and you get an expected cost that is not high enough to be dictating Fed policy. 
 
 One of the best guides to future inflation is recent core inflation — that is, inflation excluding food and energy prices, which bounce around a lot and often do not translate into big changes in other prices. Despite the uptick in core inflation, it has still risen at an annual pace of only 2 percent over the last three months. On only a few other occasions over the last 40 years has it been so low. 
 
 This shouldn’t be surprising. After all, does the economy feel as if it’s on the verge of overheating? 
 
 The expected cost of high unemployment, on the other hand, is steep. For one thing, the chances that unemployment will remain a problem are close to 100 percent. The debate is whether the country will return to full employment in four years or 10 years. 
 
 For another, the consequences of high unemployment are also awful. With fewer jobs, states and cities are short of tax revenue. Families lose their life savings. People’s health can deteriorate. For the long-term unemployed, the financial damage can be permanent. “If things go on and they simply sit at home or work very irregularly,” Mr. Bernanke himself said last year, “when the economy gets back to a more normal state, they’re not going to be able to find good work.” 
 
 Unemployment creates political problems, too. Historically, it has tended to make voters less willing to help their fellow citizens, as the economist Benjamin Friedman has written. It’s hard to imagine any grand political compromise — on the deficit, for instance — in an angry country. 
 
 Mr. Bernanke is an admirable public official in many ways. He was calmly heroic during the worst days of the financial crisis. By making the Fed more open, he has taken the rarest of steps for a political figure: voluntarily giving up some of his power. 
 
 Nonetheless, his job performance over the last year or so has been flawed. The Fed badly overestimated the economy’s strength in 2010 and took too long to correct its mistake. Despite his core belief in letting facts guide decisions, Mr. Bernanke has let himself be overly influenced by a group of colleagues who see inflation always and everywhere as a threat and unemployment as a mere nuisance. 
 
 The news conference on Wednesday offers a chance to hold him accountable. The country’s leading Fed scholar — one Ben Bernanke, formerly of Princeton — would expect nothing less. ||||| WASHINGTON (MarketWatch) - The Federal Reserve's Federal Open Market Committee on Wednesday left its key interest rate at an historic low range of 0% to 0.25% and said its $600 billion bond-buying program would end as scheduled on June 30. Inflation has picked up and the Fed now says the economic recovery is proceeding at "a moderate pace," but the central bank still said the inflation pickup will be temporary and the jobs market is still a concern. The decisions were widely expected. The FOMC made only few changes to the language of the policy statement it issued in March and did not give guidance on the outlook of policy after the end of quantitative easing. The FOMC repeated that rates are likely to stay low for an "extended period." The Fed gave itself flexibility by adding that it would "adjust" its holdings of Treasurys and mortgage-backed securities as needed. Attention now turns to Fed chairman Ben Bernanke's first-ever news conference scheduled to begin at 2:15 p.m. Eastern. The Fed will also release its updated economic forecasts for 2011 and 2012 just before the press conference begins. ||||| The Federal Reserve unexpectedly refrained from reducing the $85 billion pace of monthly bond buying, saying it needs more evidence of lasting improvement in the economy and warning that an increase in interest rates threatened to curb the expansion. 
 
 “Conditions in the job market today are still far from what all of us would like to see,” Chairman Ben S. Bernanke said at a press conference today in Washington after a two-day meeting of the Federal Open Market Committee. “The committee has concern that rapid tightening of financial conditions in recent months would have the effect of slowing growth.” 
 
 U.S. stocks rose, sending the Standard & Poor’s 500 Index to a record, while Treasuries and gold rallied as Bernanke stressed that the pace of bond buying would be dependent on economic data, and the Fed has no predetermined schedule for tapering the purchases that have pushed its balance sheet to $3.66 trillion. 
 
 “There is no fixed calendar schedule, I really have to emphasize that,” Bernanke said. “If the data confirm our basic outlook” for growth and the labor market, “then we could begin later this year.” 
 
 The S&P 500 climbed 1.2 percent to 1,725.48 at 4:02 p.m. in New York. The yield on the 10-Year Treasury note dropped 15 basis points to 2.70 percent. Gold for immediate delivery jumped $55.61 to $1,366.25 an ounce. Oil rose more than 2.5 percent. 
 
 Photographer: Andrew Harrer/Bloomberg The U.S. Federal Reserve building in Washington, D.C. Close The U.S. Federal Reserve building in Washington, D.C. Close Open Photographer: Andrew Harrer/Bloomberg The U.S. Federal Reserve building in Washington, D.C. 
 
 “It looks like the Fed has done a major reset in terms of expectations on what they need to see before they start to taper,” said Chris Rupkey, the chief financial economist for Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. 
 
 Rate Outlook 
 
 The central bank, in a statement, left unchanged its outlook that its target interest rate will remain near zero “at least as long as” unemployment exceeds 6.5 percent, so long as the outlook for inflation is no higher than 2.5 percent. 
 
 Bernanke added in his press conference that the first interest-rate increase may not come until the jobless rate is “considerably below” 6.5 percent. 
 
 “Even after asset purchases are wound down,” Bernanke said, the “Fed’s rate guidance and its ongoing holdings of securities will ensure that monetary policy remains highly accommodative, consistent with an aggressive pursuit of our mandated objectives of maximum employment and price stability.” 
 
 Bernanke said the Fed could also specify that it would not tighten if inflation was too low. “An inflation floor is certainly something that could be a sensible modification or addition to the guidance,” he said. 
 
 Photographer: Pete Marovich/Bloomberg Ben S. Bernanke, chairman of the U.S. Federal Reserve, pauses during a news conference following the Federal Open Market Committee meeting in Washington, D.C. on Sept. 18, 2013. Close Ben S. Bernanke, chairman of the U.S. Federal Reserve, pauses during a news conference... Read More Close Open Photographer: Pete Marovich/Bloomberg Ben S. Bernanke, chairman of the U.S. Federal Reserve, pauses during a news conference following the Federal Open Market Committee meeting in Washington, D.C. on Sept. 18, 2013. 
 
 Forecasts Reduced 
 
 Fed officials today reduced their forecasts for economic growth this year and next. They forecast U.S. gross domestic product to increase 2 percent to 2.3 percent this year, down from a June projection of 2.3 percent to 2.6 percent growth. 
 
 “They feel the risks are too great to taper now, and the economy is not growing as fast as they had hoped,” said John Silvia, chief economist at Wells Fargo Securities in Charlotte, North Carolina. “They are going to take a few more months and maybe start in December.” 
 
 Economists had forecast the FOMC would dial down monthly Treasury purchases by $5 billion, to $40 billion, while maintaining its buying of mortgage-backed securities at $40 billion, according to a Bloomberg News survey. 
 
 Fed officials were spooked by an increase in bond yields that followed Bernanke’s comments in May that the Fed may step down the pace of purchases in the “next few meetings,” said Scott Brown, chief economist for Raymond James & Associates Inc. in St. Petersburg, Florida. 
 
 Treasury Yields 
 
 The yield on the 10-year Treasury note climbed almost 1 percentage point through yesterday since Bernanke’s May 22 comments, with yields on Sept. 6 exceeding 3 percent on an intraday basis for the first time since July 2011. That compares with 1.61 percent on May 1, and a record-low 1.38 percent in July 2012. 
 
 “They were really surprised back in May and June by the market’s response to the initial talk of tapering,” Brown said. “The Fed’s view was that it’s the amount of asset purchases, not the monthly pace that matters. In that case, it doesn’t matter whether they start tapering in September or December, but the markets decided it does, so it does matter.” 
 
 “We’re seeing the reaction that bond yields are coming down, and that’s got to be helpful for their outlook.” 
 
 Kansas City Fed President Esther George dissented for the sixth meeting in a row, repeating that the policy risks creating financial imbalances. 
 
 Higher interest rates have started to take a toll on housing, one of the drivers of the expansion. A Commerce Department report today showed that builders began work on fewer U.S. homes in August than projected by economists. 
 
 Housing Starts 
 
 Housing starts rose 0.9 percent to a 891,000 annual rate, following the prior month’s 883,000 pace that was weaker than previously estimated. The median estimate of 83 economists surveyed by Bloomberg called for 917,000. Permits, a proxy for future projects, dropped more than forecast. 
 
 The average interest rate on a 30-year fixed home loan was 4.57 percent last week, compared with a record-low 3.31 percent in November 2012, according to Freddie Mac. The rate soared 35 percent in 10 weeks ended July 11, the most ever for a comparable period, the data show. 
 
 Bernanke, who is nearing the end of his second term as chairman, has orchestrated the most aggressive easing in the Fed’s 100-year history, pumping up the balance sheet from $869 billion in August 2007 and holding the main interest rate close to zero since December 2008. 
 
 Leading Candidate 
 
 Vice Chairman Janet Yellen, a supporter of Bernanke’s policies, is the top candidate to succeed him after former Treasury Secretary Lawrence Summers withdrew from contention, according to people familiar with the process. 
 
 The Fed’s asset purchases have fueled gains in asset prices. Counting today’s increase, the S&P 500 Index has climbed 23 percent since Aug. 31, 2012, when Bernanke made the case for further monetary easing at the central bank’s annual forum in Jackson Hole, Wyoming. 
 
 Officials have also credited the program, which began last September, with reducing the unemployment rate, which is the lowest since December 2008. Officials have said that they would maintain bond purchases until the labor market has “improved substantially.” 
 
 At the same time, recent data on payrolls, housing and retail sales have lagged behind economists’ forecasts. 
 
 Jobless Rate 
 
 U.S. companies created 169,000 jobs last month, fewer than economists projected, and increases in the prior two months were revised down. The unemployment rate fell as workers left the labor force. August and July were the weakest back-to-back months for payroll gains in a year. 
 
 Employment growth has nevertheless improved since the bond purchases began. The U.S. has added an average of 160,000 jobs over the past six months, compared with 97,000 originally reported for the half-year before the Fed decided to start the third round of purchases a year ago. 
 
 Faster employment gains may be needed to spur the consumer spending that accounts for 70 percent of the economy. Retail sales last month rose less than forecast, with purchases climbing 0.2 percent, the smallest gain in four months, the Commerce Department reported last week. 
 
 Bright Spots 
 
 Homebuilding and manufacturing remain bright spots for the economy. 
 
 Companies such as Hovnanian Enterprises Inc. have said the recent rise in mortgage rates will temporarily restrain the housing recovery rather than end it. 
 
 Homebuilder confidence held this month at the highest level in almost eight years, even as mortgage rates rose. The National Association of Home Builders/Wells Fargo confidence index registered 58 this month, matching August’s revised reading as the strongest since November 2005. 
 
 Such optimism has found fuel from a recovery in home prices that pushed up the S&P/Case-Shiller (SPCS20Y%) index of values in 20 cities by 12.1 percent in June from a year earlier. 
 
 Factories turned out more cars, appliances and home furnishings in August, propelling the biggest increase in U.S. industrial production in six months. Output at factories, mines and utilities rose 0.4 percent after no change the prior month, the Fed reported this week. 
 
 Auto Sales 
 
 Cars and light trucks sold last month at the fastest annualized rate since 2007, according to researcher Autodata Corp. Sales at General Motors Co., Ford Motor Co. (F), Toyota Motor Corp. and Honda Motor Co. all exceeded analysts’ estimates. 
 
 Texas Instruments Inc., the largest maker of analog chips, is among companies with a brighter outlook as global markets stabilize. 
 
 “Orders continue to be quite solid” this quarter, Chief Financial Officer Kevin March said at a Sept. 11 conference. “We continue to see strength in three of the four regions of the world,” with Asia, Japan, and the Americas expanding, he said. 
 
 To contact the reporters on this story: Joshua Zumbrun in Washington at jzumbrun@bloomberg.net; Jeff Kearns in Washington at jkearns3@bloomberg.net 
 
 To contact the editor responsible for this story: Chris Wellisz at cwellisz@bloomberg.net
– No surprises from the Fed today: Rates are staying low, and its $600 billion bond-buying program remains on track to end in June, reports MarketWatch. The Fed sees the economic recovery moving at a "moderate pace" and downplayed the risks of inflation. Far more interesting will be Ben Bernanke's first-ever press conference at 2:15pm EST to explain the Fed rationale. David Leonhardt at the New York Times says business reporters "shouldn’t let him get away with the evasions and half-answers that members of Congress too often allow Fed chairmen during their appearances on Capitol Hill." A big one to ask: "Why has Mr. Bernanke decided to accept widespread unemployment for years on end, even though he believes he has the power to reduce it?"