In January 2003, the statement of the Federal Open Market Committee consisted of 118 words. In March 2013 it contained 560. Last week, the Committee added another sentence.
A decade ago, the Federal Reserve's messages were refreshingly simple: the decision, key variables, and a short prognosis. A policy tool without vague considerations. The statement served to convey a message in a blink. With Bernanke things have changed. Statements have not stopped growing since the policy became much more complex in order to "communicate" with the markets. The process continued at the last meeting when an additional sentence was added:
"The Committee is prepared to increase or decrease the pace of its purchases to maintain an appropriate period of policy accommodation while the outlook for the labor market or inflation changes."
The question is: why? Is not something you already knew and understood?
"While determining the size, pace, and composition of its asset purchases, the Committee will continue to take the appropriate measures (...) to progress towards economic objectives."
However, since this is the only change in the long statement, there must be a good reason. At first glance it may appear as the first is a small step towards the exit of QE - this is something that some members of the Federal Open Market Committee have been asking since 2012. But the Committee seems to be dominated by some members that may have seen an opportunity in the March employment data to include the message, which possibly can work to their advantage (in case of slow improvement in the labor market and less inflation, another increase in QE could be necessary).
Whatever the reason, the April unemployment data only 1% above the "rising target" has provided them with convincing arguments. If the data of next month continues this trend, the FED meeting in June could be very interesting.
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