Wednesday, September 17, 2014

Evolution of the US Federal Reserve Language

“Extended period.” 6.5 percent unemployment. “Considerable time.”

Every six weeks or so, after the Federal Reserve holds a policy meeting, it issues a statement containing guidance to the financial world on when it might raise interest rates.

It’s a moment of great expectation for investors and economists.

The language the Fed has used has steadily evolved since it cut its benchmark short-term rate to a record low in 2008. On Wednesday, after the Fed’s latest meeting ends, it may or may not retain its most recent guidance: That it expects to keep its short-term rate near zero for a “considerable time” after it stops buying Treasurys and mortgage bonds. Those purchases are set to end in November.

via Mainichi

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