The Federal reserve highlighted that its monetary policy will remain accommodative
Wall Street stocks climbed to fresh all-time highs overnight after the Federal Reserve said it will begin reducing its $120 billion in monthly bond purchases in the coming weeks by $15 billion a month. Investors cheered the outcome of the meeting as the central bank’s announcement was in line with markets expectations. Furthermore, the bank highlighted that its monetary policy will remain accommodative even as it starts reducing its massive bond-buying program. As such, the S&P 500 rose 0.6%, the Nasdaq gained 1.1% and the Dow Jones added 0.3%.
Following suit, Asian equities advanced on Thursday after the Fed said it will be patient on raising interest rates while inflation risks still look transitory. Also on the positive side, Moody’s said today that headwinds to growth will dissipate in 2022, and stable global growth could be expected by 2023. Against this backdrop, the Nikkei 225 in Japan closed 0.93%, South Korea’s Kospi climbed 0.25% and China’s Shanghai Composite finished the trading day 0.81% higher.
In Europe, stocks opened higher due to a lack of hawkish signals from both the Fed and the ECB. On Wednesday, the European Central Bank President Christine Lagarde said the bank is very unlikely to raise interest rates next year as inflation remains too low. Now, the focus shifts to the Bank of England’s policy meeting later in the day. The bank is expected to raise interest rates for the first time since the beginning of the coronavirus pandemic.
Elsewhere, the dollar slipped on Wednesday in an initial reaction to a cautious tone by the Fed. However, the US currency is back on the offensive today, erasing short-lived losses nearly across the board. Later in the day, the greenback could add to gains if the upcoming economic data out of the United States surprises to the upside.