Key Takeaways From the September Fed Meeting

Traders work on the floor of the New York Stock Exchange in New York

Traders work on the floor of the New York Stock Exchange in New York

But she said it's not clear how to interpret the share price gains. Household spending and business investment growth have both increased. But its stimulus efforts that have kept rates near historic lows since 2008 have failed to boost inflation.

"We were definitely not pricing in another rate hike for this year", she said. "That's holding the kiwi-Aussie cross up a bit", he said. It has also trimmed its inflation forecast.

"The focus was on the Fed's thoughts on inflation and any implications for the pace of tightening outlined in the "dot plot". The bank also left interest rates unchanged, while at the same time signalling that they retained the option of raising rates one more time this year.

Record-high world stocks paused yesterday and the dollar dipped, as investors waited for signals from the Federal Reserve on when it will start shrinking its balance sheet and nudge up United States interest rates again.

The reaction in the Treasury market "suggests a lot of people maybe weren't anticipating the Fed would stick with the third rate hike expectation this year". They now expect there will likely be two hikes, down from three.

The balance sheet primarily consists of government and mortgage-backed bonds.

Still, the Fed said in a statement that prices for gasoline and other items might temporarily spike because of the damage caused by Hurricanes Harvey, Irma and Maria. That was the lowest level since August 2016. Raising rates too quickly could risk hobbling the recovery. The Nasdaq Composite dropped 5.28 points, or 0.08 per cent, to 6,456.04, with Apple Inc as its biggest drag.

The Dow Jones industrial average rose 17 points, or 0.1 percent, to 22,388.

In the US stock market, the Dow Jones Industrial Average rose 79.11 points, or 0.36 percent, to 22,347.45, the S&P 500 gained 6.5 points, or 0.26 percent, to 2,506.73 and the Nasdaq Composite added 27.47 points, or 0.43 percent, to 6,475.94.

The dollar started the new week with growth backed by USA bond yields and the upcoming Federal Reserve session this week. The pound, which had surged last week when the Bank of England hinted a rate increase was coming, was at $1.3544, from $1.3592.

In October, the Fed will begin reducing its $4.5trn portfolio in bonds by stopping reinvesting the proceeds of maturing debt accumulated through the various QE programmes.

Tokyo's benchmark Nikkei index today climbed almost 2% to close at its highest level in more than two years, rising past the psychologically important 20,000 mark.

Japan's Nikkei 225 rose 0.71%. Wednesday was the 37th record close for the S&P 500 this year.

The U.S. dollar earlier rose to a two-month high against the yen, while an index that measures the dollar's strength against a basket of currencies dipped.

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