FOMC decided not to Taper QE at their September meeting

Today’s FOMC statement produced no major changes to monetary policy:

Maintains $85B a month pace of purchasing Treasuries & Mortgage Backed Securities
Kept rates at 0-0.25% as long as the unemployment rate remains above 6.5% and 1-2 year projected inflation remains below 2.5%

Key proclamations within the statement:

“Tightening of financial conditions…could slow the pace of improvement in the economy and labor market”
“Taking into account the extent of federal fiscal retrenchment, the Committee sees the improvement in economic activity and labor market conditions…as consistent with growing underlying strength in the broader economy”
“The Committee decided to await more evidence that progress will be sustained before adjusting the pace of its purchases”
“In judging when to moderate the pace of asset purchases, the Committee will, at its coming meetings, assess whether incoming information continues to support the Committee's expectation of ongoing improvement in labor market conditions and inflation moving back toward its longer-run objective”
“Asset purchases are not on a preset course, and the Committee's decisions about their pace will remain contingent on the Committee's economic outlook as well as its assessment of the likely efficacy and costs of such purchases”

September summary of economic projections for 2013 saw decreases to their growth & unemployment outlooks (from June):

GDP: 2.0 to 2.3 from 2.3 to 2.6
Unemployment Rate: 7.1 to 7.3 from 7.2 to 7.3
PCE Inflation: 1.1 to 1.2 from : 0.8 to 1.2
Core PCE Inflation: unchanged at 1.2 to 1.3

Huge market response since the announcement:

USD has fallen significantly versus the majors – between 50-100 pips across the board
US equities are higher – DJIA +175 points
Treasuries have rallied – 10 year yield is 12bp lower

Источник: Forex.com

19.09.2013