Fed sticks with 'patient' plan

The Federal Reserve reiterated Wednesday that it is in no rush to begin hiking interest rates, as the economy continues to grow while inflation actually declines.

In its latest policy statement, the central bank adhered to the message it delivered back in December, again saying it could be “patient” to raising interest rates above zero.

ADVERTISEMENT

Buttressing that slow-going approach was confident language from the Fed regarding the overall economy. In its statement, the Fed described the economy as growing at a “solid pace,” boosted by “strong job gains and a lower unemployment rate.” The Fed also noted that a decline in energy prices, most visibly at the gas pump, has boosted household purchasing power too.

The Fed did note that inflation actually has declined a bit and is likely to continue that way, but remained confident that it will eventually return to the Fed’s 2 percent target. The central bank described the risks to the economy and labor market as “nearly balanced.”

The latest Fed statement also showed that the central bank is largely committed to its slowgoing approach. The December statement, which also included the “patient” language, saw three dissenting votes from the normally consensus-driven body. Wednesday’s statement was unanimously backed by all members of the Federal Open Market Committee.

As it has previously, the Fed left the door open for more dramatic action should the economic winds shift significantly. The central bank vowed that it would be closely monitoring all incoming data. If new information suggests the economy is growing more quickly than expected, the Fed is prepared to hike rates “sooner than currently anticipated.”