Reuters (12/03/13) Ann Saphir
San Francisco Federal Reserve Bank president John Williams said in an interview that the U.S. Federal Reserve must more aggressively provide details on what will cause it to raise interest rates. These details will prevent investor uncertainty. Williams said the bank must convince investors that rates will remain low after the Fed stops buying bonds. When it decides to stop buying bonds, it should announce an end date and a purchase total, Williams said.
The Fed plans to stop buying bonds when unemployment reaches 6.5%, so long as inflation does not rise above 2.5%. Unemployment was 8.1% in September 2012 when the Fed began its program and is now at 7.3%. Neither Federal Reserve chairman Ben Bernanke nor his successor-to-be, Janet Yellen, have indicated what would cause the Fed to raise interest rates. Most economists think the Fed will continue buying bonds at least until March, but some say that reductions could occur in December, particularly if job creation improves.
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