When the Federal Reserve's Open Market Committee finished its two-day meeting today, you can bet economists and Fed analysts immediately did a Ctrl+F search in the committee's statement for one phrase: "for a considerable time."
The central bank has used this phrase in its statements since September 2012 to describe how long after the end of its latest round of quantitative easing, QE3, the Fed plans on keeping short-term interest rates at their uber-low near-zero levels. The federal funds rate has been targeted at 0 to 0.25 percent since late 2008, in an effort to stimulate the economy by encouraging lending and boost asset prices.
The question is how long that considerable period might be. The Fed has been backing off of its QE3 monthly asset purchases and is set to end the program in October. And with that date coming up, the question everyone wants answered is what happens with the Fed's other major stimulus program of low interest rates.
At the March press conference — her rookie press conference outing as Fed Chair — Yellen gave a ballpark guess as to how long that "considerable time" might be.
"It's hard to define. But, you know, it probably means something on the order of around six months or that type of thing," she said.
October plus six months equals April, but it's not at all clear that FOMC members (Yellen included) think that will be the right time to boost rates … or where they want to put interest rates once they do start to bump them upwards.
And that brings us to one other big reveal from this Fed meeting: dots. This is the Fed's system of showing what FOMC members think would be the best levels for interest rates in the coming years. Here's what FOMC members (each represented by a dot) thought would be appropriate for interest rates, as of June.
Today, they issued a new set of dots that continues to show a lack of consensus but also a general shift in favor of higher 2015 interest rates:
It's a big, touchy decision that's all about timing: pulling back the low-interest-rate rate stimulus too early could stall economic growth, but doing it too late could mean spiking prices, as the Wall Street Journal's Jon Hilsenrath wrote over the weekend.
So when the Fed does raise interest rates, it will mean either (or both) of two things: One, it could simply mean the Fed thinks the US economy can survive without low interest rates. Two, it could mean the Fed is afraid low interest rates could push inflation up.
All that said, it's not at all clear that it's really a good time to pull back on any of the Fed's economic support (or even talk about it) in the first place. Inflation is still running below 2 percent, wages are only starting to tick upward, and the last jobs report was mediocre. Given that, not to mention that the central bank already has the end of QE3 happening soon, it could easily just punt the interest rate communication into the future.