NEW YORK ( TheStreet) --Investors got an early Christmas present Wednesday when the Federal Reserve maintained its pledge -- in slightly different wording -- to keep interest rates low.
The central bank's policy statement kept the phrase "considerable period" when describing its rate outlook but added a new phrase: that it could afford to be "patient" when deciding on rate hikes. After some initial confusion, the markets decided that this was all good news.
"This new language does not represent a change in our policy intentions," Federal Reserve chairman Janet Yellen assured reporters in her press conference.
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Stocks, which already were rallying before the Fed statement, spiked even higher afterward.
Although expectations are that the Fed won't raise rates before June 2015, Yellen hinted that a rate hike could actually come sooner. During her press conference, the chairman said that the Fed wouldn't make any changes for "at least the next couple of meetings," a suggestion that a move could come before June.
The Fed meeting came at a critical time for global markets. Oil prices have collapsed, the Russian economy is in a death spiral and financial markets are clearly worried about the fallout from both.
As recently as last week, analysts had said language about "patience" might replace the "considerable time" wording, pointing to rate hikes sooner. The central bank followed that path when it last began raising rates in 2004.
"The Committee judges that it can be patient in beginning to normalize the stance of monetary policy," said the statement released on behalf of the Fed's Open Market Committee. "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 following the end of its asset purchase program in October, especially if projected inflation continues to run below the Committee's two percent longer-run goal."
The events of the last week clarified the real challenge the Fed confronts: As the world's economic superpower, the increasingly-healthy $17 trillion U.S. economy needs to lend a hand to the rest of the world's $55 trillion economy.