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Fed drops the word “patient” from its outlook for monetary policy | 19.03.2015

 

The Fed released its interest rate decision on Wednesday. It kept its monetary policy unchanged but dropped the word "patient" from its outlook for monetary policy. That means that the Fed could start to raise its interest rate soon.

 

 

The Fed noted that it would hike interest rate when it is "reasonably confident" that low inflation is on track to return to its 2% target and as long as the labour market keeps strengthening.

 

 

The Fed Chair Janet Yellen said dropping the word "patient" does not mean that the Fed will start to hike its interest rate. It will depend on the economic data, she noted.

 

 

The central bank cut its forecasts of the fed funds rate for 2015 to 0.625% from 1.125%. Inflation forecasts for 2015 were lowered to 1.3% - 1.4% from 1.5% - 1.8%.

 

 

The Fed cannot rule out that it starts to raise its interest rate in June, but the pace of rate hikes could be slower than expected.

 

 

"It will be appropriate to raise the target range for the federal funds rate when it has seen further improvement in the labor market and is reasonably confident that inflation will move back to its 2 percent objective over the medium-term," the Fed noted.

 

 

The central bank downgraded its economic activity forecast as it said that it said growth has "moderated somewhat". It said in January that the economic growth is solid.

 

 

The Fed also said that a stronger U.S. dollar weighs on U.S. exports

 

 



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