Confirmation of further impending monetary stimulus followed the conclusion of the Federal Reserve’s policy setting meeting on September 13th, providing a temporary boost to both the fixed income and equity markets. Commodities – especially oil, which had responded positively to similar prior rounds of stimulus, are weakening on concerns regarding economic slowdowns in Europe and China.
The Federal Reserve’s Chairman Bernanke used his post meeting statement to emphasize the Board’s commitment to promoting stronger economic growth, stating that they would keep interest rates low through mid 2015 and would not tighten monetary policy until the unemployment rate falls below 7%. This change in tone is significant, as it implies that the Fed will tolerate a slightly higher rate of inflation so as to promote job growth.
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