The Fed removed ‘considerable time’ but hedged as much as possible

So the Fed removed a commitment to keeping rates low for a ‘considerable time’ but replaced it with patience and then took it one step further and spelled out that they see no difference between the old guidance and the new one.

The Committee sees this guidance as consistent with its previous statement that it likely will be appropriate to maintain the 0 to 1/4 percent target range for the federal funds rate for a considerable time.

The market was purely focused on ‘considerable time’ and isn’t interested in Yellen’s hedge. The clearest reaction is in the bond market, where yields are rising in a sign the market sees higher rates.

But the Fed funds rate is sending a different signal. That probability of rates at 0.50% or higher in September is at 46.8% compared to 52.7% yesterday.

Aside from that, what’s most striking is that the Fed doesn’t make any reference to the turmoil and soft growth outside of the US. That strikes me as a bit naive about the risks in the global economy.