Fed promises 'patient' approach to a rate increase

Source: AP-Excite

By MARTIN CRUTSINGER

WASHINGTON (AP) — The Federal Reserve is edging closer to raising interest rates from record lows given a strengthening U.S. job market and economy. But it says it will be "patient" in determining when to raise rates.

The Fed said Wednesday after a policy meeting that such an approach is consistent with its previous guidance that it expected to keep its benchmark rate near zero for a "considerable time."

The message from the Fed was that the strength of economic data and the level of inflation, not a calendar date, will dictate when it will raise rates. At a news conference, Chair Janet Yellen stressed that the Fed was making no changes in its policy. She said she foresees no rate increase during the first quarter of 2015.

Stock investors signaled their approval of the Fed's guidance that rates will likely stay low for at least several more months. The Dow Jones industrial average, which had risen about 160 points before the Fed issued its statement, was up about 274 points later in the afternoon.

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Federal Reserve Chair Janet Yellen makes a statement on jobs and economic outlook, Wednesday, Dec. 17, 2014, at the Federal Reserve in Washington. The U.S. economy is finally doing better, and the Federal Reserve may be ready to acknowledge that fact. (AP Photo/Cliff Owen)

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