Today's Federal Reserve policy statement was a bit unusual, in that not only did the Fed not do anything new, but everyone knew they weren't going to do anything new. Nobody thought interest rates would rise, and nobody thought there would be new Quantitative Easing. And there wasn't. All that happened is that the wording of the statement changed. That makes parsing the fine details of the wording more important than it usually is. A single word — patient — sent the stock market on a two-day rally that's the best since 2011.
So here's the most important line in the statement and why it matters:
Based on its current assessment, the Committee judges that it can be patient in beginning to normalize the stance of monetary policy.
Boring, right? But it's a big deal because for quite a while now, Fed statements have said that even after the end of Quantitative Easing, there would be no interest rate hikes "for a considerable period." Since time passes between each statement, pressure was building for a change in phrase that would take the passage of time into account. At the same time, the economy has been getting stronger — we've had three good jobs reports in a row. So the question was building as to whether the "considerable period of time" language would change in a way that indicates Yellen is thinking of raising rates sooner than seemed appropriate back in the October meeting.
The meaning of this patient business is supposed to reassure people that the language is changing, but the policy is not. Later, the statement says that "the Committee sees this guidance as consistent with its previous statement that it likely will be appropriate to maintain the 0 to 1/4 percent target range for the federal funds rate for a considerable time."
Long story short, time has passed, and so the statement has changed. But the policy remains the same. Interest rates will stay low.