Wall Street Journal (02/03/14) Jon Hilsenrath; Victoria McGrane
Incoming U.S. Federal Reserve Chairman Janet Yellen likely will face questions about why U.S. unemployment levels are falling so quickly and whether the central bank should intervene. The U.S. jobless rate was 6.7% in December. The Fed has said it would not raise short-term interest rates from near zero until the jobless rate falls to at least 6.5%, which could become a reality soon. The central bank has said it could maintain the ultra-low rates beyond the 6.5% jobless rate if other economic indicators are weak, which means rate increases are unlikely in the near future, say experts. If rates are kept low too long, however, inflation could rise significantly and financial bubbles could surface; but if rates are moved upward too soon, recovery could slow.