Washington – 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.
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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. Unemployment 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 Fed Chairman Ben Bernanke made in December after the Fed announced it would change its guidance for future rate increases. Bernanke said the Fed might decide to keep stimulating the economy even after unemployment falls below 6.5 percent.