Research - MARCH 25, 2014

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FOMC scraps Evans Rule, continues tapering

by Reg Clodfelter

At its first meeting under the leadership of Janet Yellen, the Federal Open Market Committee decided to continue its tapering of quantitative easing by $10 billion and to update its forward guidance policy to no longer recognize the 6.5 percent lower threshold for unemployment, known as the Evans Rule, that would determine how long the Federal Reserve would continue to suppress interest rates. Both of these results were expected.

“With the unemployment rate nearing 6-1/2 percent, the Committee has updated its forward guidance. The change in the Committee’s guidance does not indicate any change in the Committee’s policy intentions as set forth in its recent statements,” the committee said i

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