The Federal Reserve yesterday took baby steps in the direction of a more hawkish stance on rates, tweaking its guidance on future policy for the first time since March and shaving a token $25bn from planned asset purchases.

In a shift first foreshadowed in the Financial Times, the US central bank edged away from a simple forecast that it expects to keep rates at “exceptionally low levels” for an “extended period” – commonly understood to mean at least six months.

For the first time, policymakers identified the assumptions on which this interest rate guidance is based: “Low rates of resource utilisation, subdued inflation trends and stable inflation expectations.”

Implicitly, the statement indicates that if these conditions are not met – because of an upside surprise on growth, a pick-up in inflation or a rise in inflation expectations – the Fed may have to raise rates within the six-month period. In doing so, it clarifies the conditional nature of the Fed rate guidance.

Meanwhile, the Federal open market committee decided to shave $25bn off the planned $200bn purchase of debt issued by Fannie Mae and Freddie Mac. The decision was justified on technical grounds reflecting “the limited availability of agency debt”.

The reduction only makes the tiniest dent in the Fed's $1,750bn asset purchase programme. However, it was notable that the committee simply cut the $25bn rather than transferring it to purchases of mortgage-backed securities backed by Fannie Mae and Freddie Mac.

This underscores that it would take a lot to persuade mainstream Fed officials and hawks to increase purchases of MBS – an option a handful of Fed doves want to consider.