For the rest of 2016, 10 out of 17 Fed members project just one interest rate increase this year.
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Federal Reserve Bank of Boston President Eric Rosengren said the USA central bank’s failure to get back to a strategy of gradual rate increases may threaten the ongoing US economic recovery.
Gold for immediate delivery slipped less than 0.1 percent to $1,336.48 an ounce at 1:55 p.m.in NY, after four straight gains.
ENERGIZED: Energy companies rose, following oil prices.
The Dow Jones industrial average rose 98.76 points, or 0.54 per cent, to 18,392.46, the S&P 500 gained 14.06 points, or 0.65 per cent, to 2,177.18 and the Nasdaq Composite added 44.34 points, or 0.84 per cent, to 5,339.52.
“Lower for longer is a good thing for the equity markets.” said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago. Thursday stocks continued to rally.
“The FOMC chose to keep Fed funds target range unchanged at 0.25%-0.50%, this had been expected given the slow rate of improvement in recent economic data”, said Dominic Barnes, portfolio manager at Investec Wealth & Investment.
A number of economists and investors say the Fed’s resistance to raising rates, coupled with conflicting messages from its top leaders, has worn down public confidence in the central bank.
When the central bank hiked rates last December for the first time in seven years, the DJIA fell 10% in the next six weeks. Only 6 percent of those surveyed expected the Fed to raise rates, with the majority believing it would wait until December.
Shares of Apple rose 0.45 percent premarket after Nomura and RBC raised price targets.
Other commodities were also rising, which helped out materials stocks. Freeport-McMoRan, the mining giant, jumped 51 cents, or 4.8 percent, to $11.05. In a new round of economic projections published Wednesday, Fed officials predicted that the central bank’s benchmark rate would rise to 1.9 percent by the end of 2018, well below their March prediction that it would reach 3 percent by the end of 2018. The 30-year yield rose to 2.460 percent from 2.435 percent.
On balance, the yield on the two-year Treasury note TMUBMUSD02Y, -1.05% which is most sensitive to rate changes, was largely unchanged at 0.775%, after logging Thursday its largest single-day drop in a week, according to Tradeweb. Their outlook implies little contribution from fiscal policy to USA growth.
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Earlier, the euro touched its highest level against the dollar in almost a week at $1.1250. The dollar edged up to 100.78 yen from 100.51 yen.
