U.S. jobless rate forces Yellen's hand on Fed guidance

SAN FRANCISCO/NEW YORK (Reuters) - The rapid drop in U.S. unemployment will make re-crafting the Federal Reserve's easy-money promise a top priority for new Chair Janet Yellen, who will probably avoid tying policy to specific targets in the labor market. The Fed still wants to assure investors that rates will stay low for at least another year, but there is growing debate among policymakers over how to get this message across now that the jobless rate stands at 6.6 percent but the pace of job creation remains erratic at best. Fed officials are likely to drop any reference to a specific rate of unemployment, according to several who have addressed the topic in recent days. "We will have to reformulate it and provide some qualitative way of providing an assessment of what time horizon we think is most likely," Jeffrey Lacker, president of the Richmond Fed, told reporters in Virginia on Tuesday.

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