AUSTIN, Texas, Feb 21 (Reuters) - The U.S. central bank needs to rethink its guidance to financial markets on the future path of interest rates as its unemployment threshold is fast approaching, a top Federal Reserve official said on Friday.
The Fed has promised to keep rates near zero until well after the unemployment rate, now at 6.6 percent, falls below 6.5 percent, especially if inflation remains below a 2 percent target.
Dallas Federal Reserve Bank President Richard Fisher said that although the jobless rate was a blunt instrument, it was the best policy-makers had.
“The most important thing is where do you go next, what do you signal to the markets, what is your ‘forward guidance’?” he told journalists on the sidelines of a University of Texas business school event.
“We need to signal to the markets, a bit little more clearly perhaps ... and I think it is hard to do in quantitative terms.”