Fed official hints at longer period for low interest rates

Federal Reserve building in Washington / Win McNamee/Getty Images

NEW YORK 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. Unemployment is currently 7.9 percent.

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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.

[lami987]

Its not surprising at all. After all Fed works for big banks. Banks would do anything to keep interest low. That doesn't mean they would charge less on money they loan out. It only means they would pay less on money they borrow from savers. A saver earns almost nothing from interest on his/her saving. If the saver turns around and borrows the same amount of money from any bank, the saver would have to pay an arm and a leg for it. Worse yet if the saver borrow on a credit card. Tragically our congress granted the authority for Fed to do so. Congress, you do really good work. For the banks that is.