The Federal Reserve is unlikely to raise interest rates until mid-2012 in light of new unemployment figures, which signal a slow economic recovery, Reuters reported.

November's unemployment rate rose to 9.8% from 9.6% in October while the U.S. private sector added just 50,000 jobs -- about a third of what analysts had forecast -- the U.S. Labor Department announced Friday. Additionally, the underemployment rate, which includes both the unemployed and those working part time who are seeking full-time jobs, remained at a 17%, and the number of people out of work for at least six months increased to 6.3 million, the Labor Department said.

On the Chicago Board of Trade, short-term interest-rate futures traders aren't pricing in increases in the target interest rate for overnight lending between banks until May 2012, according to Reuters. Traders, who previously indicated that they thought the Federal government would curtail its plan to buy $600 billion in bonds to spur the economy, had been pricing in an interest-rate hike at about December 2011 before this latest jobs report.

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Delaying raising interest rates could be helpful to those who are paying off debt at a variable interest rate (e.g., some homeowners, some credit card users, etc.)

December 04 2010 at 12:17 PM Report abuse -1 rate up rate down Reply

Contrary to popular belief and wisdom____if the Federal Reserve started "Just talking" about a possible 1/2 percent interest rate hike being on the table____ it could go a long way towards increasing homeownership demand and business investmeent demand____because they would all want to borrow now____ before the rates go up___if the Fed even "hinted" at higher rates the Fed would be giving buyers a reason to believe rates were going higher, so they better buy now. As long as people have no reson to think rates are going up__they are in no rush to buy or make business investments.

December 04 2010 at 5:20 AM Report abuse +1 rate up rate down Reply

Thats just bad news all the way around. Holding intrest rates down cuts off lending of money from privet institutions. The only loan you can get is a government sponcered loan because there's no money is lending at the lowered rates.

December 04 2010 at 12:40 AM Report abuse +2 rate up rate down Reply