Wall Street’s main indexes set new records. Investors reacted positively to the Federal Reserve’s (Fed) decision, which stated that the US economy is strong enough to start limiting asset purchases. In addition, the key interest rate in the US was kept in the range of 0-0.25 percent.
The Dow Jones Industrial Average closed 0.29 percent at 36,157.58 points. This is the historical peak of the index.
The S & P 500 index rose at the end of the day by 0.65 percent to 4,660.57 points. It is also a new record for this index.
The Nasdaq Composite Index, up 1.04%, also closed the session at a record high of 15,811.58 points.
This is the fourth consecutive session where the three major indices posted new highs.
US interest rates
Investors focused on the Federal Reserve’s meeting on Wednesday. As expected, the rate of US asset purchases by the Federal Reserve will be reduced in November and will reach $15 billion per month – $10 billion on government bonds and $5 billion on MBS mortgage-backed securities.
Moreover, the Federal Reserve kept interest rates at their current level. Federal Reserve Chairman Jerome Powell said during a video conference after Wednesday’s meeting that now is not the time to raise interest rates in the United States, and added that the US supply constraints are continuing for longer than expected.
The purpose of this meeting was to curb the asset purchase program and not to raise interest rates. It’s time to rein it in as the US economy makes more progress toward our goals. We believe that now is not the time to raise interest rates. The Fed Chairman noted that we continue to strive for maximum employment, both in terms of the unemployment rate and the labor force participation rate.
The timing of raising interest rates will depend on the development of economic activity. If a response is required, we will not hesitate. We are closely watching that the economy is developing as we expect and that policy adjusts accordingly. (…) When we reach a situation where – according to the opinion of the Federal Open Market Committee – labor market conditions are maximizing employment opportunities, it is possible that the inflation target will already be achieved – added Powell.
The decision on interest rates was in line with market expectations and was taken unanimously. The next meeting of the Fed is scheduled for December 14-15.
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