Fed Teases to When Interest Rates Will Go Up

The Fed is waiting for unemployment to hit a magic number before it entertains changing interest rates

The low interest rates that have been around for the past few years won’t be here forever, according to the latest news from the Federal Reserve.

In an effort to do its part to get America back on the track to solvency the Fed has implemented quantitative easing, a program designed to keep interest rates low as a means of stimulus. The stimulus has been great for borrowers, but not as kind to savers. Still, the Fed stands by the controversial program and has been vague about when it will begin to pursue another course of action.

Now, the agency has revealed that it will continue to buy $40 billion of mortgage-backed securities each month, plus an additional $45 billion in Treasuries. This is a step up from Operation Twist, a policy set to end this month that swapped short-term Treasuries the Fed already owned for longer term bonds, according to CNN Money.

The Fed will continue this aggressive action until it sees a significant drop in unemployment. What’s the magic number? 6.5 percent and below or when inflation hits 2.5 percent.

“Although the unemployment rate has declined somewhat since the summer, it remains elevated,” the Federal Reserve said in a statement Wednesday.

For more on the Fed’s actions and what it means for your bank account, head to CNN Money.

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