8:53 AM » How Long is Six Months, Really?
The Wall Street Journal's Daily Report on Global Central Banks for Thursday, March 20 Sign up for the newsletter: http://on.wsj.com/grandcentralsignup . "It probably means something on the order of around six months or that type of thing." - Janet Yellen during her inaugural press conference as Fed chairwoman, on the definition of a "considerable period." Read our free e-book, "Yellen and the Fed," a WSJ Briefing. Available for download at www.wsj.com/fed HILSENRATH'S TAKE Investors made quite a fuss Wednesday about Federal Reserve Chairwoman Janet Yellen's suggestions that a) the Fed will end its bond-buying program in the fall, and b) the Fed will wait six months after the bond-buying program ends before raising short-term interest rates. Crude math suggests the Fed could be raising interest rates by April. But let's look more closely at both comments. The fall in the U.S. runs from Sept. 22 to Dec. 21. The Fed has two policy meetings during that stretch - one Oct. 28-29 and one Dec. 16-17. If it continues to wind down its bond-buying program at the present pace, the Fed will purchase $15 billion in bonds in October and will need to decide whether to end the program completely at the October 28-29 policy meeting or to end it in two steps, reducing it by $10 billion at the October meeting and by the last $5 billion at the December meeting. Depending on the choice, the program would end in either November or January. It's not entirely clear what Ms. Yellen had in mind when she said the fall. It seems unlikely that the Fed has made a decision on that point yet. A later end to bond buying implies a later start to rate increases.