Fed Lower For Just a Bit Longer Drives Stock to New High

Wall Street is smiling. Although the economy is getting better, the Federal Reserve is probably not going to raise interest rates until the summer of 2015 at the earliest.
The Fed said Wednesday that it continues to believe rates should remain low for a “considerable time” after its bond buying program is complete — which should happen following its next meeting.

Investors were pleased. They sent the Dow to a record level in the afternoon — crossing 17,200 for the first time ever. The index closed at a new high of 17,157.

Matthew Whitbread, portfolio manager at Barings Asset Management, said investors seem to be relieved that the Fed did not make any significant changes to its policy plans. But he said that the upcoming Scottish independence vote could inject some uncertainty into the markets if Scotland votes to break its ties to the U.K.

Fed chair Janet Yellen declined to comment about the potential market impact from Scotland when she was asked about it during a press conference.

The Fed also gave more details about its “exit strategy” to end the stimulus efforts it has had in place since the 2008 credit crisis and return interest rates to more normal levels.
As expected, the Fed said it is reducing, or “tapering,” its asset purchases by $10 billion a month to just $15 billion. So it is widely expected to announce one final taper when it meets again in October.

via CNN

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza