Yellen hints at plans for dropping 'patient' from Fed's statement

Federal Reserve Chairwoman Janet Yellen told the Congress the Federal Reserve was making plans to drop the word “patient” from its statement.

Speaking on Tuesday, Yellen insisted that investors should not assume that dropping the word would mean an interest rate rise would come sooner than expected, but simply that Fed’s officials wanted flexibility to hike interest on a meeting-by-meeting basis.

Provided labor markets and economic conditions continued to grow steadily, Fed officials will lift interest rates once they are "reasonably confident" that low inflation is edging back toward the Fed's 2% annual target.

"The Fed is clearly getting close to the first rate hike, which we expect in June," said Paul Ashworth, chief US economist at Capital Economics.

"Beyond that, we anticipate that rising wage and core price inflation will prompt the Fed to hike the fed funds rate to between 1.00% and 1.25% by end-2015 and 2.75% to 3.00% by end-2016."