Fed vice chairman hints at longer period for low rates
BY Wire Reports
Tuesday, February 12, 2013
2/12/13 at 4:28 AM
Federal Reserve Vice Chairman Janet Yellen says the central bank may keep its key short-term interest rate at a record low even after unemployment falls close to a more normal level.
The Fed has said it would hold its benchmark rate near zero as long as unemployment is above 6.5 percent and long-run inflation forecasts are below 2.5 percent. The unemployment rate is currently 7.9 percent.
In a speech Monday to the AFL-CIO, Yellen said those are "thresholds for possible action, not triggers that will necessarily prompt an immediate increase."
Her comments echoed remarks Chairman Ben Bernanke made in December after the Fed announced it would change its forward guidance for short-term rate increases.
Yellen has been a close Bernanke ally on Fed policy. She is considered a top prospect to succeed him as chairman should he leave when his term ends on Jan. 31, 2014.
Federal Reserve Vice Chairman Janet Yellen: She indicated that the Fed won't raise interest rates for the foreseeable future.