Consumers and businesses can brace for another two years of exceptionally low interest rates after the Federal Reserve said Wednesday that it is likely to keep its rates below 1% until late 2014 because of the economy’s continued weakness.

The decision means the era of historically low rates on loans — and savings — that the Fed kicked off at the peak of the financial crisis in late 2008 will run longer unless the economy improves faster than Fed policymakers predict.

The Fed said unemployment would stay near its 8.5% level through the end of this year and could still be in the range of 6.7% to 7.6% at the end of 2014. Housing remains depressed while growth in business investment has slowed, it said.

Meanwhile, inflation is staying below 2%.

Fed Chairman Ben Bernanke left open the possibility that the Fed could do more to fight joblessness, even at the short-term risk of inflation above the bank’s 2% annual target.

“There has been some encouraging news recently,” Bernanke said at a press conference. “There are positive signs, no doubt. At the same time, there are mixed signals,” as indicators such as retail sales growth have been disappointing, he said. Policymakers are also worried about Europe’s financial crisis, he said.

The Fed’s moves, and especially its decision to discuss its thinking about rate policy much more publicly than it has in the past, are laden with consequences for savers, borrowers and consumers, said PNC Financial chief economist Stuart Hoffman.

“It means that if you own certificates of deposit and you’ve bemoaned low rates, bad news — you’re going to get that this year, next year and the year after,” Hoffman said. “If you’re a borrower, very low mortgage rates are going to be here for a while. Some people may delay making decisions, but other people will plan for the future” and prepare either to buy or renovate homes, he said.

Bernanke acknowledged that savers are hurt by the low rates. “We realize that low interest rates impose a cost,” he said. “The savers in the economy are dependent on a good economy to get a good return.”

Wall Street reacted favorably to the news, pushing stocks higher and interest rates lower. The Dow Jones industrial average climbed 83.10 points to 12,758.85. The yield on 10-year U.S. Treasuries, which closed at 2.06% Tuesday, dropped as low as 1.91% before settling at 1.99%.

Most Fed governors think the economy will grow by 2.2% to 2.7% this year, with unemployment at 8.2% to 8.5% and core inflation at 1.5% to 1.8%, the Fed said.

“This is what they should be doing,” said Robert Tipp, chief fixed-income investment strategist for Prudential Financial, who helps manage more than $300 billion of bonds. He said the economy has to improve before Congress can begin to narrow the federal deficit, and easy monetary policy is the best available tool.

“There’s not enough growth, there’s too much debt, and not enough confidence,” Tipp said. “The Fed should do these things so people know the Fed has their back.”

The Fed runs the risk of setting markets up for another bad ending, like the bursting of the housing bubble in 2008 after years of speculation fueled by low rates, said Gary Kaltbaum, president of Kaltbaum Capital Management.

“They are running monetary policy as if we were in a depression,” Kaltbaum said. “Last I looked the economy was growing. There will be issues at the end of this road.”

The Fed will still have to pump more money into the economy, said Miller Tabak & Co. economic strategist Andrew Wilkinson, who had predicted the Fed will eventually announce another round of government bond buying worth up to $1 trillion.

“Make no mistake — a third wave of QE (quantitative easing) is on the way,” Wilkinson wrote in a note to clients. “The only question is timing.”

The Fed disclosed that six of the 17 members of its rate-setting FOMC thought rates should begin to rise this year or next. Still, that’s only a third of the members, and includes at least three Fed governors who don’t have a vote on rate decisions, said University of Oregon economist Tim Duy.

“The more hawkish contingent is a clear minority,” said Duy, who writes the FedWatch blog.

Bernanke said further bond buying could be ordered if the economy stumbles. Given how low short-term interest rates are, the Fed has few other choices, he said.

“We can’t just cut the federal funds rate (by a quarter of a percentage point) like in the good old days,” he said.

The central bank’s announcement comes as investors and economists increasingly split into camps, one convinced that the U.S. economy is beginning to recover more rapidly and those who believe it still needs more stimulus, either from government spending or monetary policy.