Fed Vows Continued Patience On Rate Hikes

(RTTNews) - The Federal Reserve said Wednesday it will "patient" in determining when to raise interest rates, a subtle change in language from its previous vow to keep rates near zero for a "considerable time."

"Based on its current assessment, the Committee judges that it can be patient in beginning to normalize the stance of monetary policy," the Fed said.

The FOMC "sees this guidance as consistent with its previous statement that it likely will be appropriate to maintain the 0 to 1/4 percent target range for the federal funds rate for a considerable time following the end of its asset purchase program in October, especially if projected inflation continues to run below the Committee's 2 percent longer-run goal, and provided that longer-term inflation expectations remain well anchored."

In essence, the Fed reassured markets that it will take its time before removing any further support for the recovering economy.

Members of the rate-setting Federal Open Market Committee expect the economy to continue to improve at a moderate pace, with conditions on the labor market further stabilizing. There was no reference to economic weakness in Europe or the emerging crisis in Russia.

Furthermore, the Fed expressed little worry about the potential impact of plunging oil prices on inflation.

"The Committee expects inflation to rise gradually toward 2 percent as the labor market improves further and the transitory effects of lower energy prices and other factors dissipate."

Nearly all Fed officials see a rate hike in 2015, but policy makers think increases will be even more gradual than early projections.

The Fed's benchmark interest rate is seen increasing next year from zero to a median of 1.125 percent instead of 1.375 percent.