*Fed foresees recovery dragging on through 2014

That's the takeaway from this morning's announcement that short-term rates are expected to remain close to zero through at least 2014. That compares with the Federal Reserve's earlier forecast of mid-2013. By keeping rates so low, the Fed is hoping to spur spending and growth. From the NYT:

The decision means that the Fed does not expect the economy to complete its recovery from the 2008 crisis over the next three years. By holding rates near zero, the Fed hopes to hasten that process somewhat by reducing the cost of borrowing. "While indicators point to some further improvement in overall labor market conditions, the unemployment rate remains elevated," the Fed said in a statement released after a two-day meeting of its policy-making committee. "Household spending has continued to advance, but growth in business fixed investment has slowed, and the housing sector remains depressed.

For Wall Street, this is a mixed bag. Generally, low interest rates are good for stocks, but the Fed's subdued economic outlook can't be seen as great news. For now, the Dow has erased its earlier losses and is up about 50 points.

*From Fed Chairman Ben Bernanke's press conference: "We continue to see headwinds emanating from Europe, coming from the slowing global economy," he says. "I don't think we're ready to declare that we've entered a new, stronger phase at this point."