The Fed Eases Back

As expected, the Federal Reserve kept interest rates unchanged in a range of 2.25 percent to 2.5 percent after its meeting yesterday. The Fed also signaled it would be “patient” about further interest-rate moves, and even added that policymakers were open to slowing the pace of the runoff of its balance sheet if needed.

In December, the Fed said it still expected the next policy move would be to raise interest rates. But yesterday, the central bank backed away from any forward guidance about monetary policy, suggesting the next move could be to raise or lower interest rates.

The Fed also indicated a greater willingness to keep its roughly $4 trillion portfolio of government bonds, in the hopes that they would help prevent long-term rates from rising if the economy falters. That marks a shift from its prior plan to steadily shrink its balance sheet.