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News Link • Federal Reserve

Federal Reserve to spend $45B a month to buy bonds, links rate hike to 6.5 pct. unemployment

• Washington Post
 

The Fed says it plans to keep its key short-term rate near zero at least until the unemployment rate drops below 6.5 percent — as long as expected inflation is tame. Unemployment is now 7.7 percent.

That plan adds detail to what the Fed had said before: that it expects to keep the rate low until at least mid-2015. For the first time, the Fed is making clear to investors and consumers that it will link its actions to specific economic targets.

In a statement Wednesday after its final policy meeting of the year, the Fed also said it will keep spending $85 billion a month on bond purchases to drive down long-term borrowing costs and stimulate economic growth.

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