Fed: Unemployment Isn't Our Guide Anymore
Yellen suggests interest rates might rise in mid-2015
By Kevin Spak, Newser User
Posted Mar 19, 2014 2:17 PM CDT
A television screen at a post on the floor of the New York Stock Exchange show the decision of the Federal Reserve, March 19, 2014.   (AP Photo/Richard Drew)

(Newser) – The Federal Reserve will no longer rely on the unemployment rate as its be-all, end-all indicator of economic health, it announced today. Until now, the Fed has set its goal at 6.5% unemployment. But as the jobless rate nears that threshold, the central bank said it would keep rates low, and start looking to other economic metrics, Reuters and Bloomberg report. "A highly accomodative stance of monetary policy remains appropriate," the committee said in a statement. It said rates would remain below normal levels "well past the time" that unemployment fell below 6.5%. But the bank also announced that it would continue slowly scaling back its bond-buying stimulus, cutting security purchases from $65 billion to $55 billion.

And once tapering ends, how long will the Fed wait to start raising interest rates? “The language that we used in the statement is considerable period," said new Fed chief Janet Yellen in her first press briefing. "This is the kind of term it’s hard to define. But, you know, probably means something on the order of around six months, that type of thing.” That would put the first rate hike in the middle of next year, reports MarketWatch. "Did Yellen mean to be that specific?" asks the site's Rex Nutting. "No, but she’s now the Fed chair, and markets will react to what she said, not what she means."

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Showing 3 of 36 comments
John
Mar 19, 2014 10:03 PM CDT
Obama....lies, lies, lies and more lies
No-Left-Turn
Mar 19, 2014 9:24 PM CDT
" It said rates would remain below normal levels "well past the time" that unemployment fell below 6.5%" Because the Fed knows that in this environment, the true unemployment rate is around 12.5%. So many people have quit looking for work that the traditional unemployment number is meaningless. You have to look at the U6 unemployment rate which is more encompassing. http://portalseven.com/employment/unemployment_rate_u6.jsp
Smellthecoffee
Mar 19, 2014 8:55 PM CDT
If the unemployment rate were actually 6.5 % this Country would be in great shape. The Federal reserve wants to use other indicators to manipulate the US economy. Many People still believe that the Federal reserve is part of our government and don't realize that it's a Private bank that doesn't have the American people's best interest in mind (no pun).