Fed to keep short-term interest rates low

As expected, the Federal Reserve confirmed that it will be keeping interest rates exceptionally low, but did not say for how long exactly. That’s because the Fed did not set a date but a threshold for when it will begin to increase the interest rate again: an unemployment rate of 6.5 percent. Tying the increase to economic conditions provides more transparency for the public, said Fed Chairman Ben Bernanke after the Fed’s regular two-day policy-making meeting this week. One exception to the threshold is if inflation gets too high. Once the rate hits 2.5 percent, the Fed will start increasing the interest rate regardless of the unemployment rate.