US unemployment rate could stall despite job growth

Although left unsaid, the research suggests that it could lead the Fed to keep its foot on the monetary policy gas pedal even longer than currently expected.

Last week the US central bank indicated it would leave short-term interest rates near zero until unemployment fell to at least 6.5 per cent, as long as inflation does not threaten to rise above 2.5 per cent.
It has also pledged to keep buying long-term securities unless the outlook for the labor market improves significantly.

An unprecedented drop in the per centage of the working-age population that is in the labor force has been the biggest factor behind the fall in the unemployment rate to 7.7 per cent last month from a peak of 10 per cent in October 2009.

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