The Federal Reserve has said it will no longer use the US unemployment rate as its definitive yardstick for gauging the strength of the economy.<br /><br />It could keep interest rates unusually low even after the US job market returns to full strength and inflation rises to the central bank’s target.<br /><br />The Fed had previously pledged to hold the cost of borrowing at record low levels until the jobless rate fell below 6.5 percent. <br /><br />Janet Yellen, the central bank’s new head, said it was a change in guidance rather than policy<br /><br />On deciding when to raise interest rates the Fed now says it will rely on a wide range of measures – including unemployment and inflation. <br /><br />As expected the Fed’s Open Market Committee continued to trim its stimulus buying of bonds – something which it has been doing to inject money into the US economy and help it recover. <br /><br />It will cut the bond purchases from 65 billion dollars to 55 billion a month.<br /><br />On the labour market, Fed officials new forecasts see unemployment dropping slightly faster, to between 5.6 percent and 5.9 percent by the end of next year.
