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Federal Reserve Signaled it Would Keep Rates Low once Bond Buying Ends
The dollar held declines against most major peers, according to Bloomberg News, after the Federal Reserve signaled it would keep interest rates low once the bond-buying program has ended. The Dow Jones Industrial Average also climbed to a record high in the U.S.
Most economists do not expect a rate increase before mid-2015 at the earliest. A markets strategist in Melbourne at IG Ltd., Evan Lucas, wrote in an e-mail to clients that, “The silver lining here is that the Fed funds rate will remain untouched.” Lucas also said that according to a report by Bloomberg News, “the accommodative stance is certainly going to maintain the current upswings in consumer sentiment and spending.” The Fed reported that the economy is gaining momentum.
The Federal Open Market Committee said in its statement that “Growth in economic activity has picked up recently, after having slowed sharply.” According to Bloomberg News, they have reported that, “Household spending appears to be rising more quickly.”
The U.S. central bank announced the fourth straight $10 billion cut in monthly bond buying. Stock and bond prices both rose modestly. The Federal Reserve said according to the Statesman that, the economy had strengthened after all but had stalled during a harsh winter.
It has been reported that China’s economy continued to stall in April. Economists surveyed by Bloomberg predict the official manufacturing purchasing managers’ index for Asia’s largest economy will rise to 50.5 for April, from 50.3 in March. Asian index futures followed U.S. stocks higher, and oil was below $100 on record-high crude supplies.
The Bloomberg China-US Equity Index of the most-traded Chinese stocks in New York climbed 0.2 percent. The relatively quiet bond markets “allow the Fed to reflect on big-picture themes,” reported, economist at Standard Chartered Bank, Thomas Costerg. “There is mounting pressure to clarify the exit strategy and the role of some liquidity facilities, although it is unlikely that the Fed will decide this now,” he said, according to Reuters.
Image Credit: www.bloomberg.comFederal Reserve Signaled it Would Keep Rates Low once Bond Buying Ends by Jaan