We're just hours away from Janet Yellen's 2:00 p.m. press conference, and investors are still in the dark on whether interest rates will rise following the Fed meeting today (Thursday).
U.S. markets were flat this morning ahead of the Fed meeting, with the Dow Jones Industrial Average down six points in early trading.
Investors are waiting anxiously, because the decision will have a huge impact on stocks...
We're just hours away from Janet Yellen's 2:00 p.m. press conference, and investors are still in the dark on whether interest rates will rise following the Fed meeting today (Thursday).
U.S. markets were flat this morning ahead of the Fed meeting, with the Dow Jones Industrial Average down six points in early trading.
Investors are waiting anxiously, because the decision will have a huge impact on stocks...
Market participants were hoping for clarity following the highly anticipated FOMC meeting Wednesday on the big question: to taper, or not to taper?
As many expected, there were no explicit statements about when the Fed would end its massive quantitative easing (QE) measures.
"A few weeks back, I noted that Chairman Bernanke wouldn't have the guts to take his foot off the gas pedal when it came to stimulus, so it's no surprise to me that he's going to keep plowing $85 billion a month into bond buying," explained Money Morning Chief Investment Strategist Keith Fitz-Gerald. "What's interesting to me is that the market fell anyway, when he announced the economic risks have subsided."
The U.S. central bank kept its benchmark interest rate at 0%-0.25%, and kept in place its $85 billion a month bond purchase program. The consensus remains that the Fed will start to "taper" QE before the end of the year - although the timeline wasn't made clear today.
"I think the markets didn't get the clarification they wanted," Fitz-Gerald continued. "Are things good enough that stimulus is no long warranted or bad enough that bond purchases are still required? For a guy who promised a new era in Fed transparency, this is yet more double talk."
As for when interest rates (near zero since December 2008) could be raised - likely a separate and farther-out move than tapering QE - Morgan Stanley Chief Economist and former FOMC secretary and economist Vincent Reinhart has said the clue is in when QE starts to end.
He says if QE and rate decisions are data dependent, as the Fed maintains, the two cannot be separated. So any future Fed tapering talks suggests Team Bernanke has grown more optimistic about the health of the economy and less inclined to believe further QE will prove advantageous.
Bernanke said today any change in policy will come after stability in the Fed's economic forecasts.
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