Stocks roared to new all-time highs and bond yields retreated as the Fed defied the market’s conventional thinking by keeping its unconventional bond-buying program intact.
Most major Wall Street banks and firms expected the Fed to slightly pare back its $85 billion monthly bond buying program, by $10 billion to $15 billion. But the Fed said it wasn’t ready to cut back, citing a tightening in financial conditions that it said could hurt the economy and employment.
The Fed specifically cited rising mortgage rates, and it also blamed Washington, where Congress is heading toward another showdown on the debt ceiling. “Federal fiscal policy continues to be a restraint on growth and a source of downside risk,” said Fed Chairman Ben Bernanke.
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