Last week the Federal Reserve, made a very unusual announcement. It declared that it would could keep interest rates low as long as unemployment was above 6.5% and inflation was below 2.5%.
As of the end of November 2012, the unemployment rates was 7.7%, and inflation (as measured by the CPI) was 1.8%. This means that unemployment would need to drop by 1.2%, or inflation increase by 0.7%, for the Fed to change its policies. The last time unemployment was 6.5% was October 2008. However, CPI was above 2.6% as recently as March 2012.
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