Federal Reserve to keep interest rates low if inflation remains low

Federal Reserve to keep interest rates low if inflation remains lowThe Federal Reserve has indicated that it would consider keeping its interest rates low as long as the inflation in the country remains low.

The indication from the US central bank is affirmation that it will not roll back its supporting policies for the economy until the economy achieves full recovery. Experts have been calling on the Federal Reserve not to raise rates warning that it would slowdown growth in the economy. They said that the interest rates should remain at low levels at-least until the unemployment rate falls to 6.5 per cent or inflation rises above 2.5 per cent.

The Federal Reserve is now considering committing itself not to increase rates if the inflation is below a certain target. Fed Chairman Ben S. Bernanke said that it would be desirable if the Federal Reserve provides future guidance. The Federal Reserve had indicated that it would roll back its stimulus package that directly infuses billions of dollars into the economy. Low inflation level has added a new dimension to the Federal Reserve's support for the economy. Inflation remains at around 1.2 per cent, according to the latest data released by the government.