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Fed uses 'Evan's Rule' to tie interest rates to unemployment, inflation

by Take Two

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Chairman of the Federal Reserve Ben Bernake speaks during a press briefing at the Federal Reserve 11, 2012 in Washington, DC. Bernake spoke to the press after meeting with the Federal Reserve's Federal Open Market Committee. BRENDAN SMIALOWSKI/AFP/Getty Images

Yesterday the Federal Reserve announced it will now tie interest rates to the unemployment rate. Under something called the "Evans Rule," interest rates will remain as they are until unemployment goes below 6.5 percent and if inflation is projected to be no more than 2.5 percent. 

Here to help us understand more is Paddy Hirsch, the Senior Producer of Personal Finance at Marketplace.

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