As usual, the Fed chair hedged her bets somewhat, saying she wanted to see
further improvement in labor market conditions and greater confidence that inflation would move back up to 2 % in the next few years, but, based on current trends, it seems that small, incremental hikes in base interest rates are looming on the horizon.
The Committee anticipates that it will be appropriate to raise the target range for the federal funds rate when it has
seen further improvement in the labor market and is reasonably confident that inflation will move back to its 2 percent objective over the medium term.
She also said that despite a 4.9 percent unemployment rate that is bumping up against the Fed's standard for full employment, there «appears to be scope for
some further improvement in the labor market.»
The Fed statement said: «The Committee anticipates that it will be appropriate to raise the target range for the federal funds rate when it has seen
some further improvement in the labor market and is reasonably confident that inflation will move back to its 2 percent objective over the medium term.»
Further improvement in the labor market has also helped drive shares higher.
In deciding when to hike rates, the Fed repeated that it wanted to see «
some further improvement in the labor market,» and be «reasonably confident» that inflation will increase.
Further improvements in the labor markets and moderate GDP growth are foreseen.
The Committee anticipates that it will be appropriate to raise the target range for the federal funds rate when it has seen
some further improvement in the labor market and is reasonably confident that inflation will move back to its 2 percent objective over the medium term.
Likewise, Dan Greenhaus, of brokerage firm BTIG, told Bloomberg the important part of the Fed's statement is not only that it dropped the word «patient,» but that it mentioned the agency will be looking for «
further improvement in the labor market» before raising rates.