FOMC Jan/14 (Bernanke´s last)
The Committee also reaffirmed its expectation that the current exceptionally low target range for the federal funds rate of 0 to 1/4 percent will be appropriate at least as long as the unemployment rate remains above 6-1/2 percent, inflation between one and two years ahead is projected to be no more than a half percentage point above the Committee’s 2 percent longer-run goal, and longer-term inflation expectations continue to be well anchored.
Yellen´s Fed quickly changed “guidance” from “numerical values” (a.k.a. Bernanke-Evans Rule) to likely “dates and time spans”.
FOMC March/14 (Yellens´first)
The Committee continues to anticipate, based on its assessment of these factors, that it likely will be appropriate to maintain the current target range for the federal funds rate for a considerable time after the asset purchase program ends, especially if projected inflation continues to run below the Committee’s 2 percent longer-run goal, and provided that longer-term inflation expectations remain well anchored.
(Note: For the first time, Ms. Yellen attempted to define that term, saying it is “hard to define” but “probably means something on the order of around six months.”)
FOMC Dec/14 (“Considerable time” becomes “can be patient”)
Based on its current assessment, the Committee judges that it can be patient in beginning to normalize the stance of monetary policy.
Based on its current assessment, the Committee judges that it can be patient in beginning to normalize the stance of monetary policy. However, if incoming information indicates faster progress toward the Committee’s employment and inflation objectives than the Committee now expects, then increases in the target range for the federal funds rate are likely to occur sooner than currently anticipated. Conversely, if progress proves slower than expected, then increases in the target range are likely to occur later than currently anticipated.
News Feb/15 (“patient” defined by “at least 2 meetings”)
Yellen Tuesday repeated that the Fed’s pledge to be “patient” on beginning to raise the benchmark interest rate means an increase is unlikely for “at least the next couple” of meetings. The central bank adopted the guidance in December and repeated it in January.
FOMC Mar/15 (Dropped “patient” but it´s all “open-ended”)
Consistent with its previous statement, the Committee judges that an increase in the target range for the federal funds rate remains unlikely at the April FOMC meeting. 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. This change in the forward guidance does not indicate that the Committee has decided on the timing of the initial increase in the target range.
And the result, as I argued here, has been a progressive tightening of monetary policy! It´s pure circular reasoning and the image of a dog chasing its own tail comes to mind!