You wouldn't think that the nation's monetary policy boils down to semantics, but it most certainly does.

On Wednesday the Federal Reserve Board issued a statement that it had ruled out an interest rate hike as far out as its next meeting in April. It also left out the word "patient" in a description of its stance about raising rates going forward. That omission riled many business experts, who said interest rates could rise as soon as June, when the Federal Open Market Committee, the policy-making board of the Federal Reserve, meets after April.

"With continued improvements in economic conditions, we don't want to rule out the possibility that an increase in the target range could be warranted at subsequent meetings," Federal Reserve chairwoman Janet Yellen said in a press meeting following the statement release.

The federal funds rate has been kept at artificially low rates of between 0 percent and 0.25 percent since the financial crisis in 2009. By decreasing interest rates, the Fed hoped to increase the supply of money in the economy. A combination of federal bond purchases and lower interest rates also had the effect of bolstering returns in the stock market, which has been in bull territory for the past five years.

While stock markets may react wildly to the potential for increased interest rates, the message that small-businesses owners should take from all of this is that the economy is in full recovery mode, and prospects are good for the future, economists say. And even if interest rates go up in the next couple of months, most small businesses won't take a direct hit, because the increase is likely to be small, says Kathryn Kobe, director of price, wage, and productivity analysis for business advisory Economic Consulting Services in Washington, D.C.

Kobe adds that an interest rate increase, when it finally comes, would probably be in the range of 0.25 to 0.5 percentage points. That, in turn, could trigger rate moves on other kinds of debt, like mortgages and long term Treasury debt, as well as credit card rates.

On the plus side, however, "higher interest rates might make banks somewhat more eager to lend," as they can make more money on loans, Kobe says.

Companies that might feel the pinch most would include any business that works in markets in which interest rates play a role, Kobe says. That includes construction companies, which are tied to their customers' ability to get affordable mortgages, and exporting companies, which tend to borrow more to sustain operations during the long cycles between manufacturing products, shipping them, and getting paid.

An examination of the Fed's statement shows that while it certainly did remove the word "patient" from its wording, it also hedged pretty carefully. Here's what it said:

The Committee anticipates that it will be appropriate to raise the target range for the federal funds rate when it has seen further improvement in the labor market and is reasonably confident that inflation will move back to its 2 percent objective over the medium term. This change in the forward guidance does not indicate that the Committee has decided on the timing of the initial increase in the target range.

To be sure, the Fed does anticipate continued improvement in the months ahead. According to the Fed's own economic projections, the economy--as measured by Gross Domestic Product (GDP)--could expand up to 2.7 percent through the end of 2016. It expects unemployment to dip to between 4.9 and 5 .1 percent by the end of 2016, down from its current rate of 5.5 percent. 

Meanwhile, it forecasts core inflation, which excludes energy and food prices, to increase at the relatively modest rate of 1.3 to 1.9 percent over the next two years.

"The Fed has done a lot of work getting the economy to its current level after the Great Recession," says Jonathan Citrin, founder of investment advisory CitrinGroup, of Birmingham, Michigan, and an adjunct professor of finance at Wayne State University. "It has enabled small businesses to borrow at lower rates, make money on their investments, and operate in a relatively stable environment."

And you can now add the low cost of oil to the roster of good economic news, financial experts say. Cheaper oil has tended to plump up the bottom lines of companies by lowering energy costs. Or, at least, it has added to the wallets of entrepreneurs, with lower gas prices at the pump. 

"We are in great shape right now," says Mitchell Fillet, a professor of finance and investment at Columbia University in New York.

Published on: Mar 19, 2015