WASHINGTON, D.C.: The Federal Reserve on Wednesday (Thursday in Manila) kept its “patient” tack on an interest rate hike as it upgraded its view of the US economy, signaling a June move remained in play.
The Federal Open Market Committee (FOMC), as expected, left the key federal funds rate near zero, where it has been pegged since late 2008 to support the recovery from the Great Recession.
The Fed “judges that it can be patient in beginning to normalize the stance of monetary policy,” the Fed’s policy arm said in a statement after a two-day meeting.
The FOMC had inserted the “patient” language in its December statement. Fed Chair Janet Yellen said last month that the description meant the Fed was unlikely to raise interest rates within the next couple of meetings, in January and in March.
Most economists say the first rate hike would likely come at the FOMC meeting in mid-June.
“Officials will have to drop ‘patient’ in March if they want to tighten as soon as June,” said Jim O’Sullivan, chief US economist at High Frequency Economics.
The March 17 to 18 meeting will be accompanied by updates of the Fed’s economic and rate forecasts, as well as a news conference with Yellen.