"Just because we removed the word patient from the statement doesn't mean we are going to be impatient."
-Janet Yellen, Fed Chair
The Federal Reserve has eventually dropped its previous patient stance towards an increase of the federal funds rate. Yesterday, following the FOMC monetary policy meeting, the regulator's chair Janet Yellen indicated that the central bank is almost ready to begin raising interest rates. However, the pace of hike will be slower than initially estimated. For now, the median forecast for the federal funds rate at the end of 2015 stays at 0.625%, down from 1.125% forecasted back in December of the previous year. At the same time, the probability of a hike as soon as June increased considerably. Besides that, Yellen underlined that any movements during the next FOMC meeting in April are still unlikely. She added that abandoning the word "patient" does not automatically mean fast and unexpected decisions.
In its statement, the Federal Open Market Committee pointed out further improvements on the labour market, as economy is creating more than 200,000 jobs already for 12 straight months in a row, while unemployment is falling. The latter indicator decreased to just 5.5% last month. Taking that into consideration, many Fed officials believe the US economy is strong enough at the moment to continue growing without historically low borrowing costs.
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