The Federal Reserve has introduced a new weapon in monetary policy. The difference between keeping key rates exceptionally low for an extended period, or keeping them at that level "at least until mid-2013" may seem like a small difference, but it is actually crucial (and the difference is underlined by the fact that three members of the Open Market Committee voted against, preferring the previous wording).
It is rare for a central bank to tie its hands for two years, binding itself to a specific date. The reason is that by doing so the Fed hopes to influence the entire rate structure, since long rates are nothing more than short rates repeated over time.
The tone of the statement also leaves the door open for a new round of quantitative monetary expansion, while it is confirmed that, at a minimum, the Fed will continue to reinvest proceeds from redemptions of maturing bonds.
