The Fed Removes "Patient" from Post-Meeting Statement: What It Could Mean for Rates

Posted by Laine Smith on 4/8/15 9:28 AM

Topics: Economy

The Federal Open Market Committee dropped the word "patient" from their March 18 post-meeting statement. The Fed began using this word in December 2014 in regards to its stance on raising interest rates.

Mortgage-Interest-Rates-Headed-Higher

Though the elimination of the word was received by some as a subtle indication of the end of the era of zero interest rates, Fed Chair Janet Yellen said that the removal of the word "patient" does not mean they will become "impatient". The elimination of the word was followed by a statement that "an increase in the target range for the federal funds rate remains unlikely at the April FOMC meeting".

The statement also said that it will be an appropriate action to raise the target range for the federal funds rate when the Fed sees further improvement in the labor market and inflation moves back to "its 2 percent objective over the medium term".

Yellen visited Capitol Hill twice in February, where she gave significant insight into the occurrence of the next rate hike. She said the word "patient" would be removed before a rate hike occurs and with that removal, the committee would consider the possibility of an increase at each subsequent meeting.

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