Stock Markets Rise As Fed Keeps Rate Pledge

Written By Unknown on Kamis, 18 September 2014 | 14.47

World stock markets have risen after the US Federal Reserve confirmed it would maintain near-zero interest rates for a "considerable time".

The Fed's reassurance was issued a month before its bond-buying stimulus program is due to end.

Many economists and traders had expected the central bank to alter its rate guidance to prepare the ground for rising borrowing costs as the US economic recovery gathers momentum.

In a statement after its two-day meeting, the Fed confirmed a further $10bn reduction in its monthly asset purchases to boost money supply.

It said rates would stay at current levels as long as inflation remained under control and until it saw consistent gains in wage growth and falls in long-term unemployment.

The most significant change in the guidance came from updated rate projections which suggested an acceleration in rate hikes once they got underway.

The Fed has held benchmark overnight rates near zero since December 2008 and has more than quadrupled its balance sheet to $4.4trn through its series of bond purchase programs.

Its plans to exit the extraordinary monetary stimulus were also updated.

The Fed said it expected to end or phase out the reinvestment of proceeds from its bond holdings some time after it begins raising rates, depending on the state of the economy.

The statements were greeted positively by world markets, with US stocks rising slightly while the dollar soared to a six-year peak against the yen.

That helped Japan's Nikkei make solid gains in Thursday trading, while stocks were also seen opening higher in Europe.

In London, the FTSE 100 rose 0.1% while Germany's DAX was 0.3% higher.


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