Roundup: S&P +1.66%, Dow +1.84%, Nasdaq +1.15%, Gold $1218.60, London +0.09%, Germany +1.06%, France +1.00%. At pixel: Nikkei +1.60%, Hang Seng -0.02%
The Fed announces a $10B per month taper. Treasury purchases cut to $40B per month. MBS purchases cut to $35B per month.
Fed also noted that it likely will be appropriate to maintain the current target range for the fed funds rate (0.0% – 0.25%) well past the time that the unemployment rate declines below 6.50 %, especially if projected inflation continues to run below the committee’s 2% longer-run goal.
Analysts reactions (WSJ): “step in the right direction”, “this is a very dovish taper-lite”, “both the ECB and BoJ have a lot to lose from FX appreciation and the pressure will be on them to ‘out-dove’ the Fed.”
South-east Asian markets are hoping “The rally in U.S. equities will be contagious for all Asian stock markets today.” (WSJ)
The test now is to see whether Vice Chairwoman Janet Yellen, who will likely replace Ben Bernanke in February, can keep markets in check as the Fed continues down this path of normalizing monetary policy. (WSJ)
The RBI kept the repo rate unchanged at 7.75% despite high inflation. It may have to hike interest rates in January if high inflation persists. (LiveMint)