Fed Scales Back Stimulus Campaign.
Source: nyt
The Federal Reserve said on Wednesday that it would reduce its monthly bond-buying campaign to $75 billion in January, beginning a retreat from its stimulus campaign, because it no longer saw the need for the full force of those efforts.
The Fed sought to offset concerns that it was once again pulling back too soon by reinforcing its intent to hold short-term interest rates near zero well past the time that the unemployment rate declines below 6.5 percent, especially if projected inflation continues to run below the committees 2 percent longer-run goal.
The steps, announced after a two-day meeting of the Feds policy-making committee, represent the beginning of a long-anticipated shift in Fed strategy. Officials say that the bond-buying campaign, which has totaled $85 billion a month until now, has contributed to a modest increase in job creation, but that they are concerned about the Feds reliance on a relatively untested form of monetary policy. They would like instead to lean more heavily on forward guidance about short-term interest rates, a more familiar policy tool.
The committee sees the improvement in economic activity and labor market conditions over that period as consistent with growing underlying strength in the broader economy, the committee said in a statement on Wednesday.
Read more: http://www.nytimes.com/2013/12/19/business/economy/fed-scales-back-stimulus-campaign.html?hp
Dow way up, by 249.
Gothmog
(145,063 posts)It appears that the market was expecting larger cuts
Maybe just glad it's 'over?' or begun to be over??? Reduced the uncertainty to some extent.
Jesus Malverde
(10,274 posts)Dow Jones Industrial Average DJIA +1.85% jumped 228 points, or 1.5%, to 16,105.40. The S&P 500 index SPX +1.67% rallied 24 points, or 1.3% to 1,805.84, within a hairs breadth of its all-time high. Nasdaq Composite COMP +1.15% was up 32 points or 0.8% to 4,055.70.
All ten main sectors on the S&P 500 were higher with financials and health care stocks leading the gains. Nasdaqs rally was somewhat hampered by Apple Inc., AAPL -0.15% which fell 1.1%.
The Federal Open Market Committee stressed its commitment to low short-term interest rates and added new language that it plans to maintain the target Fed funds rates well past the time that the unemployment rate declines below 6.5%.
Earlier, housing starts data showed that Americans built more new homes than expected in November, shrugging off rising mortgage rates. The pace at which new homes were built soared to a seasonally adjusted annual rate of 1.09 million, the highest rate since February 2008, with surges for single-family homes and apartments, the government reported Wednesday.
http://www.marketwatch.com/story/us-stocks-up-on-strong-housing-data-2013-12-18?link=MW_latest_news
elleng
(130,851 posts)according to NYT @ 4:05.