December 18, 2013

Stock Market Rockets After Fed Announces Stimulus Cuts

As we noted last month, the minutes from the Federal Open Market Committee's October meeting suggested that the Fed was "likely to trim their monthly purchase of $85 billion in bonds "in [the] coming months," perhaps even "before an unambiguous further improvement in the [economic] outlook [is] apparent."

This afternoon the Fed announced it would cut its bond purchases by $10 billion a month beginning in January, an announcement that sent stock market indexes to all-time highs.

The Committee also announced it would likely keep the federal funds rate near zero "well past the time that the unemployment rate declines below 6-1/2 percent." The 10-Year Treasury ended the day up 4 basis points.

First Published: December 18, 2013 1:30 PM

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