Stocks Hit Record As Fed Keeps Bond Buying At $85B A Month
U.S. stocks hit record highs on Wednesday after the Federal Reserve announced it would continue buying bonds at a pace of $85 billion a month to stimulate the economy.
The Federal Open Market Committee (FOMC) said it wanted to see more signs of sustained improvement in the economy before it started to reduce its bond buying.
The FOMC said in a statement: ‘… the committee decided to await more evidence that progress will be sustained before adjusting the pace of its purchases.
‘Accordingly, the committee decided to continue purchasing additional agency mortgage-backed securities at a pace of $40 billion per month and longer-term Treasury securities at a pace of $45 billion per month.’
The Federal Reserve’s shocking decision not to taper, despite broad expectations for a $10-20 billion reduction of its monthly asset purchases, has reignited talk of a global currency war.
Risk-on currencies like the Australian dollar, the euro and the British pound soared in response, while the greenback dropped across the board. Now some analysts say the Fed’s decision could prompt other central banks to devalue their currencies in an attempt to retain a competitive edge.