Fed: Will remain ‘patient’

The Fed said it would remain “patient” on raising rates, but indicated it saw the U.S. economy getting stronger.

The Federal Open Market Committee released its statement Wednesday afternoon. In a unanimous vote, the FOMC said that “the Committee judges that it can be patient in beginning to normalize the stance of monetary policy.” That language was the same as the previous month’s statement.

The Fed also said that it has seen inflation decline, and it may decline further. It also said that inflation should increase over the medium term as the labor market improved and the temporary effects of low energy prices fade.

The statement said that economic activity has expanded “at a solid pace” since it met in December—since the last statement, the language changed from “moderate pace.”

It also noted that labor market conditions have improved, characterizing job gains as “strong” as opposed to last statement’s “solid” description.

Most Federal Reserve watchers did not expect any significant announcements or language changes to this month’s statement. The FOMC was expected to maintain its “patient” language for eventually raising rates.

Kevin Lamarque | Reuters U.S. Federal Reserve Chair Janet Yellen speaking at the Federal Reserve in Washington December 17, 2014.

Kevin Lamarque | Reuters
U.S. Federal Reserve Chair Janet Yellen speaking at the Federal Reserve in Washington December 17, 2014.

In fact, some have questioned if the Fed can tighten its policy in the next few months while facing a surging dollar. Along with the globally strengthening currency, reduced oil prices may be leading to less inflation than would warrant a rate increase.

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Internationally, the Fed is operating in an environment that is seeing a growth slowdown in Asia and the launch of a major stimulus program in Europe.