The Fed had been promising since late 2012 to try to keep short-term interest rates at 0% at least until unemployment dropped to 6.5%, a level it's now approaching. On Wednesday, the Federal Open Markets Committee — the policy-setting arm of the Fed's Board of Governors — blurred the picture, declaring that it would consider the progress toward full employment (roughly 4.5% to 5%), the pace of inflation and other factors before changing its interest-rate target. It also reiterated that its rate target is likely to stay at 0% for "a considerable time" after the Fed stops its extraordinary bond-buying program.
At a news conference afterward, Yellen offered more insight into the economic indicators she'd be tracking. But the one thing markets seized on was her statement that "a considerable time" could, under certain circumstances, mean "six months." The Dow Jones industrial average dropped and interest rates on 10-year Treasury notes jumped; the former recovered Thursday, but the latter did not.