The Federal Reserve has decided to keep monthly bond purchases at $85 billion for now, saying that economic variables need to demonstrate evidence of long-term sustainability. The Committee pointed to tightening financial conditions that could impede the economic recovery as a factor behind the decision. In line with the increase in treasury yields, borrowing costs are also going up. For the time being the Fed is still guiding toward near zero for its target interest rate. However, given the unprecedented low interest rate environment, it is imminent that the Fed will eventually raise interest rates. Exactly when is another question, but it will happen. More likely, the Fed will be encouraged to start hiking rates when the US unemployment rate dips below 6.5% or inflation exceeds 2.5%.