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

 

Fonterra: Canpac Site 'Resize' To Focus More On Paediatrics

Fonterra is looking at realigning its packing operations at Canpac, in the Waikato, to focus more on paediatric nutritionals... The proposed changes could mean around 110 roles may not be required at the site which currently employs 330. More>>

ALSO:

Scoop Business: Postie Plus Brand Gets 2nd Chance With Well-Funded Pepkor

The Postie Plus brand is getting a new lease of life after South Africa’s Pepkor bought the failed retailer’s assets out of administration and said it will use its purchasing power to reduce costs of stock and fatten margins. More>>

ALSO:

Warming: Warming Signs From State Of Climate Report

Climate data from air, land, sea and ice in 2013 'reflect trends of a warming planet' -- says the latest State of the Climate report, launched by U.S. and New Zealand scientists. More>>

ALSO:

Scoop Business: Embrace Falling Home Affordability, Says NZIER

Despair over the inability to afford a house is misplaced and should be embraced as an opportunity to invest in more wealth-creating activity, says the principal economist at the New Zealand Institute of Economic Research, Shamubeel Eaqub. More>>

Productivity Commission: NZ Regulation Not Keeping Pace

New Zealand regulators often have to work with out-of-date legislation, quality checks are under strain, and regulatory workers need better training and development. More>>

ALSO:

Callaghan Innovation: Investment To Help Deepen Innovation Reporting

Callaghan Innovation, the government’s high tech HQ for Kiwi business, is to help deepen New Zealand media coverage of the commercialisation of innovation through an arms-length partnership with independent business news service BusinessDesk. More>>

ALSO:

Tax Credits, Grants: Greens $1Bn R&D Plan

In the Party’s headline economic announcement, the Greens have launched their plan to build a smarter, more innovative economy which has as its centrepiece an additional $1 billion of government investment in research and development (R&D) above current spend, including tax breaks for business. More>>

ALSO:

Inflation: CPI Increases 0.3 Percent In June Quarter

The consumers price index (CPI) rose 0.3 percent in the June 2014 quarter, Statistics New Zealand said today. This follows rises of 0.3 percent the March quarter and 0.1 percent in the December 2013 quarter. More>>

ALSO:

Get More From Scoop

 
 
Computer Power Plus

Standards New Zealand

Standards New Zealand
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news