New York Times (03/19/14) Binyamin Appelbaum

During Janet Yellen’s first news conference as the new U.S. Federal Reserve chairman, she said the central bank would reduce its monthly purchases of U.S. Treasury and mortgage-backed securities to $55 billion as the economic recovery becomes more self-sustaining. The Fed also indicated at the end of its two-day Federal Open Market Committee meeting that it would maintain short-term interest rates near zero after the unemployment rate falls below 6.5%. Yellen said that the Fed likely would raise interest rates gradually because the economic environment remains weak.

A separate set of economic forecasts from the Fed indicated that the benchmark rate could reach 1.0% by the end of 2015, up from the current 0.75%. Additionally, growth is not likely to be greater than 3.0% in 2014, compared with a December ceiling of 3.2%; unemployment is forecast to fall as low as 6.1%, rather than 6.3%. Fed officials now forecast that the unemployment rate in 2016 will reach a new equilibrium between 5.2% and 5.6%.