Federal Reserve Chairwoman Janet Yellen spoke for an hour at her press conference Wednesday, but the market only heard three words: “around six months.”
She was asked how long the Fed would wait after the tapering ends before it begins to raise interest rates.
Her answer: “So the language that we used in the statement is ‘considerable period.’ So I, you know, this is the kind of term it’s hard to define. But, you know, probably means something on the order of around six months, that type of thing.”
She added lots of qualifiers to that, including the assessment of the labor market and the inflation outlook, but the markets only heard “around six months.” Markets sold off.
The taper of the Fed’s bond purchases is on course to end in October or November. Six months after that would be April or May. So Yellen said the first rate hike could come in April or May, depending on how the economy is doing.
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