December 13, 2012
The Federal Reserve announced Wednesday that it plans to keep interest rates
low as long as the unemployment rate is above 6.5 percent. This was the first
time that the Fed has ever identified an exact unemployment rate to be reached
before it plans to raise interest rates.
To push rates lower, the Fed will continue to buy $85 billion in Treasury
securities and mortgage-backed securities each month until the unemployment rate
Since December 2008, the Fed has held short-term interest rates near zero.
The move has helped reduce borrowing costs and helped mortgage rates reach
Many of the Fed’s senior officials say they do not expect the unemployment
rate to reach 6.5 percent until the end of 2015.
In November, the unemployment rate was 7.7 percent. The last time it was
below 6.5 percent was September 2008.