The Fed is out with their statement and the words “considerable time” live to see another day!
That makes sense both substantively—the remaining slack in the economy requires continued support from monetary policy—and rhetorically: the Fed’s forward guidance has correctly emphasized that their decisions will be data driven, and the data continue to point toward risk asymmetry: the risk of tightening too soon remains potentially more costly than the risk of wage or price pressures.
Moreover, the Fed’s statement announces, as expected, that barring anything quite unforeseen, they’ll end their QE asset buying program at the next meeting.
So, foot coming off gas but not yet moving over to brake.
The WSJ statement tracker shows little change from the last statement, though what changes there are look dovish, e.g.:
[And yes, WSJ—your tracker rules!]
Also notable in regards to their take on slack, check out the FOMCs downgrade of their 2015 forecast for real GDP growth. Two years ago in their September meeting, they were looking for 3.4%; last year they marked that down to 3.25%, and today, down again to 2.8%. This too is consistent with the wait-and-see tone of the statement.
Source: Federal Reserve
So, once again, kudos to the Yellen Fed for not signaling a more hawkish stance in an economy that still needs their support. Remember, folks: when it comes to economic policy makers still trying to do something big to help the macroeconomy, the Fed’s the only game in town.