Friends
The Fed decided not to raise interest rates today. I’ll pause a moment for everyone to get over the shock. The FOMC statement did indicate that conditions have strengthened, but just to be safe (I added that) the Fed deems it appropriate to wait for further evidence that the economy can sustain and build on the improvement. So basically, they really don’t have any great explanation as to why they didn’t increase the Fed Funds rate today. I’m thinking Janet just wasn’t feeling it. Of course, coupled with the Fed’s decision was the Bank of Japan’s continued actions to stimulate an economy that has been dormant since George H W Bush’s administration. The BOJ didn’t lower rates that already are negative, but they did indicate that they are going to cap long term interest rates.
All this central bank intervention was happily consumed by the bulls as they built on small gains that the market averages had going into the announcement. By the close, the Dow Jones Industrial Average was up 163 points to finish the day at 18,293. The S&P 500 was up 23 points to close at 2163. Gold was up $19 to trade at $1,337 per ounce, while oil was up $1.50 to trade at $45.55 per barrel WTI.
In her press conference, Fed Chair Yellen did indicate that things have improved enough to warrant an interest rate hike this year. She truly is like the boy who cried wolf. I think we’ll believe that we are going to get a rate hike when we actually get one. Until then, back to the new normal of low interest rates and central bank intervention.
Have a nice evening everyone.
