Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


While you were sleeping: Fed tapers again

While you were sleeping: Fed tapers again

March 20 (BusinessDesk) – US Federal Reserve policy makers said they cut their monthly bond-buying program by another US$10 billion as they upgraded their expectations for the rate of improvement in the US labour market.

Reducing the pace of its bond purchases to US$55 billion a month, the FOMC also did away with its 6.5 percent unemployment rate as a target to maintain record low borrowing costs.

“There is sufficient underlying strength in the broader economy to support ongoing improvement in labour market conditions," the FOMC said in a statement released at the end of their two-day meeting. “With the unemployment rate nearing 6-1/2 percent, the Committee has updated its forward guidance.”

FOMC members forecast the unemployment rate will decline to be 6.1 percent to 6.3 percent in the fourth quarter of 2014, before sliding to 5.6 percent to 5.9 percent at the end of 2015, lower than the previous estimates.

“If incoming information broadly supports the Committee's expectation of ongoing improvement in labor market conditions and inflation moving back toward its longer-run objective, the Committee will likely reduce the pace of asset purchases in further measured steps at future meetings,” the Fed said. “A highly accommodative stance of monetary policy remains appropriate.”

Wall Street declined after the statement. In afternoon trading in New York, the Dow Jones Industrial Average fell 0.24 percent, the Standard & Poor’s 500 Index dropped 0.46 percent, while the Nasdaq Composite Index slid 0.41 percent.

The Fed’s view that the US economic recovery is progressing well is a double-edged sword. It is generally good news for corporate profits, and therefore equities, but the resulting decrease in monetary stimulus is less appealing.

Fed officials forecast their benchmark interest rate will be 1 percent at the end of 2015 and 2.25 percent a year later, up from previous predictions.

That pushed US Treasuries lower.

“We are closer to the end of a stable-rate environment -- you have to adapt to the signal the change is coming,” William Larkin, a money manager at Cabot Money Management in Salem, Massachusetts, told Bloomberg News.

In Europe, the Stoxx 600 Index ended the day with a 0.1 percent decline from the previous close, as did France’s CAC 40. The UK’s FTSE 100 fell 0.5 percent.

Germany’s DAX bucked the trend, adding 0.4 percent. Shares of BMW climbed, closing 7 percent higher, after the German car maker predicted new models will boost sales.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

What Winter? Temperature Records Set For June 20-22

The days around the winter soltice produced a number of notably warm tempertaures. More>>

Conservation Deal: New Kākāpō Recovery Partnership Welcomed

Conservation Minister Maggie Barry says the new kakapo recovery partnership between DOC and Meridian Energy is great news for efforts to save one of New Zealand’s most beloved birds. More>>

ALSO:

Tech Sector Report: Joyce Warns Asian Tech Investors View NZ As Hobbits And Food

Speaking in Wellington at the launch of a report showcasing the value of the technology sector to the New Zealand economy, Joyce said more had to be done to tell the country's technology stories overseas. More>>

ALSO:

Mediaglommeration: APN Gets OIO Approval For Demerger Plan

APN News & Media has received Overseas Investment Office approval for its plan to split out its NZME unit ahead of a potential merger with rival Fairfax Media's New Zealand operations. More>>

New Paper: Ninety-Day Trial Period Has No Impact On Firms' Hiring

The introduction of a 90-day trial period has had no impact on hiring by New Zealand companies although they are now in widespread use, according to researchers at Motu Economic and Public Policy Research. More>>

ALSO:

Corrections: Serco Exits Equity Stake, Remains As Operator

Serco has sold its equity stake in the company that holds the contract to design, build and run Wiri Prison in South Auckland but continues as sub-contractor to operate the facility. More>>

GDP: NZ Economy Grows Faster-Than-Forecast 0.7%

New Zealand's economy grew at a faster pace than expected in the first quarter of 2016 as construction expanded at the quickest rate in two years. The kiwi dollar jumped after the data was released. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news