The Federal Reserve signaled it will start reversing its pandemic stimulus programs in Nov. and could increase interest rates next year amid the risk of a prolonged rise in inflation.
- The Fed’s rate-setting committee pointed out in its post-meeting statement that it could start to reduce its $120 billion in monthly asset purchases as soon as its next meeting on Nov.2-3.
- Fed Chair Mr. Powell stated that officials had not made a formal decision on how quickly to scale down purchases but most agreed that a gradual process “that concludes around the middle of next year is likely to be appropriate.
- Major U.S. indexes rose to intraday highs after the Fed’s statement, with the Dow Jones Industrial Average adding nearly 520.58 points at its peak.
- The blue-chip index was up 338.48 points, while the bond market recorded a 1.332% increase in yields on a 10-year Treasury note, from 1.323% on Tuesday.
New forecasts published at the end of the Fed’s two-day policy meeting indicated that 50% of 18 officials expect to raise interest rates by the end of 2022.
DXY down -0.28%, EUR USD up +0.27%Source: The Wall Street Journal