Federal Reserve To Keep Rates Near Zero Even If Inflation Rises

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Federal Reserve To Keep Rates Near Zero Even If Inflation Rises
Chairman Jerome Powell said Thursday the new approach is more flexible. He noted if inflation spiked, the Fed could still make adjustments.
SHOW TRANSCRIPT

The Federal Reserve plans to keep interest rates near zero even after inflation rises above the 2% target level. That means the Fed is prepared to deal with a higher inflation rate than it usually does. 

Chairman Jerome Powell said in a speech Thursday that the new approach is more flexible. He noted that if inflation spiked, the Fed could still make adjustments. It just doesn't have to anymore.

The inflation rate has stayed stubbornly low recently. Powell says high inflation is no longer a serious threat to the economy, and it has changed in a way that lets the Fed keep rates low.

This could mean years of ultra-low borrowing rates for mortgages and business loans.