The Federal Reserve is strongly considering removing a barrier to raising short-term interest rates as early as June by dropping its promise to be “patient” before acting.
Discussions about interest-rate guidance and an uncertain inflation outlook are likely to take center stage at the Fed’s next meeting March 17-18. Fed officials on Tuesday began their self-imposed premeeting blackout period, in which they stop making public comments on the economy or policy.
Officials made clear in recent interviews and public speeches they want to move away from the pledge to be patient as they look to move beyond the easy-money policies that defined the postcrisis period. They first cut their benchmark federal-funds rate to near zero in 2008. The Fed has said in its official policy statement since December that it will be patient before raising the rate.
Fed Chairwoman Janet Yellen has said the patience promise means the Fed won’t raise rates at the next two policy meetings. Thus, if the Fed removes “patient” next week, it would open the door to a discussion about a rate increase at its June meeting.
Several officials have said they want that option if the economy holds up between now and then.