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Federal Reserve considers explicit pledge: Low rates if inflation stays down – WaPo

The Federal Reserve is leaning toward an explicit commitment to keep interest rates at rock-bottom levels, as long as inflation remains low.

The pledge would be an attempt to strengthen assurance that the central bank will not tap the brakes on the recovery until it is certain that the momentum can be sustained. The Fed already has vowed not to raise rates — a move that would slow economic growth — at least until the unemployment rate falls to 6.5 percent or inflation rises above 2.5 percent.

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It is strongly considering adding a third prong to that promise: not to move if inflation is below a certain target.

http://www.washingtonpost.com/business/economy/federal-reserve-considers-explicit-pledge-low-rates-if-inflation-stays-down/2013/09/23/9207e1a6-220e-11e3-966c-9c4293c47ebe_story.html

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