The Federal Reserve has effectively communicated its commitment to ultra-easy policy, so that economists and traders correctly understand that interest rates will likely stay near zero until "sometime in 2015," according to a Fed study published on Monday.
The paper, published in the latest Economic Letter from the Federal Reserve Bank of San Francisco, looks in detail at data through late May. At that time, the researchers said, investors and economists expected a first Fed rate hike around mid-2015, based on economist surveys and Treasury yields interpreted in light of near-zero rates.
Although the paper does not explicitly say so, the decline in market rates since May — when Fed Chairman Bernanke offered a timeline for the end of the Fed's massive bond-buying program that now sees too aggressive — suggests that traders may now see the Fed's first rate hike as coming even later.
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