“Of course we are anxious that bubbles will form in the economy, and we routinely monitor asset valuations, while nobody can know for sure what type of valuation represents a bubble”, said Yellen at the news conference after the meeting of the regulator.
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The Fed did signal it could hike rates by year-end as the jobs market improved further, but cut the number of rate increases expected in 2017 and 2018.
The BOJ’s announcement initially sent the benchmark 10-year JGB yield as high as 0.005 percent, into positive territory for the first time since mid-March.
Elsewhere, copper rallied to a six-week high on Thursday despite worries about slow demand growth, supported by the Fed’s policy. Pointing to the “roughly balanced” language in the Fed statement, she said, “this statement basically increased the chances of a December rate hike”. “That just tells you they are revving up the engines”.
Fed chair Janet Yellen said: “We judged that the case for an increase has strengthened, but decided for the time being to wait for further evidence of continued progress toward our objectives”.
“The Fed have signalled that if everything stays the way it is then December is more than likely the next rate rise and this will keep a lid on any rally”, David Govett, head of precious metals at Marex Spectron, said in a note.
USA stock prices rose after the Fed released its statement.
Some economists had pointed to the minutes of the Fed’s July meeting and comments from officials since then to suggest that the central bank’s “hawks” – those who think it should be acting faster to raise rates – are gathering adherents from the dove camp.
“The economy has a little more room to run than previously thought”, Yellen said.
The Philippines’ next rate move, possibly early next year, is expected to be up, as inflation is seen rising into the central bank’s target range of 2 percent to 4 percent.
The Fed’s decision does not reflect a lack of confidence in the economy, according to Yellen.
Toyota Motor shed 177 yen, or 2.9 percent, to 5,967 yen while Mazda Motor dropped 57 yen, or 3.5 percent, to 1,576 yen.
Some analysts took heart at the fact that the dollar was able to pull itself off its overnight session lows above the 100-yen level, which remains a key technical point.
The Fed announced it will continue to stand pat on interest rates until it believes the US economy is strong enough to support an increase. However, some strategists said such a policy is easier said than done.
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“We had a rich, deep, serious, intellectual debate about the risks and the forecasts for the economy, and we struggled mightily with trying to understand one another’s points of view”, she said.
