Stocks are surging in the wake of the Federal Reserve’s latest Federal Open Market Committee (FOMC) meeting statement.
The Dow is up 270 points (1.6%), the S&P is up 24 points (1.7%), and the Nasdaq is up 67 points (1.5%).
“Based on its current assessment, the Committee judges that it can be patient in beginning to normalize the stance of monetary policy,” the Fed said. “The Committee sees this guidance as consistent with its previous statement that it likely will be appropriate to maintain the 0 to 1/4 per cent target range for the federal funds rate for a considerable time following the end of its asset purchase program in October, especially if projected inflation continues to run below the Committee’s 2 per cent longer-run goal, and provided that longer-term inflation expectations remain well anchored.”
Fed watchers were largely split on whether the or not the Fed would keep the phrase “considerable time” to characterise the period between now and the first rate hike. The fact that the Fed is now using the word “patient” suggests that a rate hike will come relatively soon.
On Wednesday morning, we got inflation data that showed consumer prices fell 0.3% month-on-month in November, the most since December 2008.
Gas prices fell 6.6% in November, which is also the most since December 2008.
Year-on-year consumer prices rose 1.3%, or 1.7% when excluding the cost of food and energy; the Fed targets 2% inflation.
You can follow BI’s complete coverage of the Fed’s announcement here.