World stocks surge on Fed pledge to pause, dollar slips

World stocks surge on Fed pledge to pause, dollar slips

World stocks surge on Fed pledge to pause, dollar slips

Stock markets are up slightly ahead of the U.S. Federal Reserve's interest rate announcement and the subsequent news conference by Chairman Jerome Powell.

Jerome Powell, the chairman of the central bank, said that the case for raising the base rate had "weakened somewhat" since policymakers increased it in December a year ago and forecast two further increases in 2019.

By removing references to further rate hikes, the central bank indicated that it's not going to move prematurely on raising interest rates.

The Dow Jones Industrial Average added about 170 points to its afternoon gain after the Fed released its statement. The S&P 500 was up 1.6%, and the Nasdaq was up 2.2%.

Better-than-expected results from many U.S. companies reporting in recent days are also fuelling optimism on Wall Street, Callahan added.

Scott Minerd, global chief investment officer at Guggenheim Partners in Santa Monica, California, said the Fed's pause would further extend the economic expansion, allowing excesses to continue to build and increasing risks of financial instability. "The market will read this as they're done with the hiking cycle and that a halting in the balance sheet runoff is more likely than another rate hike". Instead, the Fed said its policy-making committee "will be patient as it determines what future adjustments to the target range for the federal funds rate may be appropriate to support these outcomes".

President Trump, meanwhile, has been an outspoken critic of the Fed's interest rate hikes.

The Fed on Wednesday left its overnight benchmark lending rate in a target range of 2.25 percent to 2.50 percent.

Met Office issues new weather warnings for heavy snow this week
Some accumulations of snow are expected, while there will be widespread frost at night with icy stretches on untreated surfaces. Wednesday will continue cold with scattered wintry showers becoming isolated and mostly dry later with good sunny spells.

The downgrade in the Fed's language around rate increases included a change in its description of economic growth from "strong" to "solid", and it noted that market-based measures of inflation compensation have "moved lower in recent months".

So what has changed since December to change the Fed's mind on rates?

Powell also said that financial conditions - stock prices and borrowing rates, for example - had become less friendly to growth.

"The case for raising rates has weakened somewhat", Powell told reporters Wednesday at the conclusion of the Federal Open Market Committee's first two-day meeting of 2019.

The euro was down 0.3 percent against the dollar at $1.1439 EUR=, pressured by comments from the Bundesbank's Weidmann.

He also said that ongoing negotiations between the United States and its trading partners may weigh on businesses more than the tariffs themselves.

Boeing Co gained 6.8 percent after the world's largest planemaker forecast full-year profit and cash flow above analysts' estimates amid a boom in air travel and speedier 737 production.

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