The US central bank completed its two day policy meeting with another taper of its asset purchase programme and an indication that rates are staying low for longer.
As widely expected, the Federal Open Market Committee reduced its monthly asset purchase programme by another
Afterwards, Yellen held a balanced and calming press conference, suggesting that the relatively new Fed chair has quickly learned not to shock the markets with unexpected comments. At one of her first post-FOMC press conferences, Yellen indicated interest rates could start to rise as soon as six months after bond bond buying ends, a time-line that she was was careful to remain flexible about on Wednesday.
US stocks had a positive reaction to Yellen's comments, and the S&P 500 made a fresh all-time high, closing up 0.8% at 1,956.98. The DJIA closed up 0.6% at 16,906.62, about 60 points off its recent all-time high, and the Nasdaq Composite closed up 0.6%.
Spread betters are indicating that
"Today's open is set to see some strong moves higher for European markets following a positive reaction in
Yellen's statement seems to have struck the right balance between dovish and hawkish. The FOMC downgraded its 2014 GDP forecast to between 2.1% to 2.3% because of the unexpected contraction in the first-quarter, but Yellen also said that the committee believes that US economic activity is expanding in the second quarter. The market was not surprised about the downgraded forecast, given the 1% contraction of the US economy in the first quarter.
Yellen was as clear as possible that the timing of an interest rate rise is not on a pre-set course, and hinted at low rates for longer, saying that even after unemployment has dropped and inflation has returned to its target 2.0% level, "economic conditions may for some time warrant keeping the target Federal Funds rate below levels the committee views as normal in the longer-run."
In the domestic data calendar Thursday,
"While falling high street prices and the ongoing strength of the labour market should continue to support volumes, recent BRC and CBI releases suggest that monthly sales cooled in May," said
From the US Thursday, initial jobless claims data is due at
Full-year results have been published Thursday by
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