InvestmentsOct 9 2014

A cautious Federal Reserve sees US markets jump

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The Federal Reserve minutes from the September 16-17 meeting revealed that discussions around the normalisation of monetary policy are part of “prudent planning” and did not indicate that normalisation will begin soon.

The Federal Open Market Committee (FOMC) said the timing and pace of rate raises will come when “economic conditions and the economic outlook warrant a less accommodative monetary policy”.

The Committee insisted it will take a “balanced approach” when it does decide to remove policy accommodation.

The minutes from the FOMC September meeting confirmed that the timing of a rate rise and “the appropriate path of the policy rate thereafter would depend on incoming economic data and their implications for the outlook”.

It emphasised that the decision will be “data dependent”.

Markets were reassured by the latest minutes from the Federal Reserve, with the S&P 500 up 1.75 per cent to 1,968, while the Dow Jones rose 1.64 per cent to reach 16,994.

The FTSE 100 was up a more modest 0.70 per cent to 6,527 on the back of the Federal Reserve minutes.