- The Washington Times - Wednesday, December 17, 2014

Sending a subtle but clear signal of a change to come, the Federal Reserve Board ended a two-day meeting by holding U.S. interest rates steady and saying it will be “patient” about ending the easy-money stance it has adopted since the onset of the Great Recession.

The Fed statement notably dropped the language routinely adopted in previous meetings that it would keep its benchmark lending rate close to zero for a “considerable time” — wording taken to suggest that higher interest rates were not on the table for the foreseeable future. The vote in favor of the statement was 7-3, with two of the three dissenters arguing that the Fed should be raising rates at a quicker pace to head off inflation.

Fed Chair Janet Yellen, meeting with reporters shortly after the end of the meeting, argued the different wording did not mean a break with the previous policy, meant to give the still-recovering U.S. economy a boost at a time when inflationary pressure were negligible. She said the word “patient” was used by the Fed in the past when it was on the watch for the need to raise rates if economic conditions improve.

Investors have been looking for clues to the timing of the first rate hike, which many expect to see by the middle of 2015. The stock markets took the release of the Fed statement as a positive sign that a tightening was not imminent, and Ms. Yellen said she did not expect the central bank to change its stance for at least the next two Fed meetings.

With gas prices falling sharply in recent weeks, the Fed’s updated inflation forecast for 2015 was lowered to between 1 percent and 1.6 percent, which is well below the Fed’s “target rate” of 2 percent seen as best promoting both a stable currency and job growth.

The Dow Jones index shot up more than 250 points in the moments after the Fed statement was released at 2 p.m. Wednesday, but fell back a bit after that.

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