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." (Read more Federal Reserve stories.)