The United States Federal Reserve (Fed) announced it will indefinitely continue with its Quantitative Easing program, pressing on with its $85 billion monthly bond purchases as a way of extending stimulus to a still fragile US economy.
Federal Reserve defers QE3 tapering to 2014
Philippine stocks are most probably gearing for a rally today following the announcement of the U.S. Federal Reserve that it will not end its Quantitative Easing program.
Earlier today, U.S. Federal Reserve Chairman Ben Bernanke said that the Fed will continue with its bond-buying program because current market conditions “are still far from what all of us would like to see”.
U.S. Fed announces Quantitative Easing (QE3) tapering
The Federal Open Market Committee (FOMC) of the U.S. Federal Reserve announced yesterday, June 19, that if the U.S. economy continues to improve, it will start winding down its asset-buying program and may completely end it by mid-year of 2014.
The news sent stock markets in the United States down by more than 1 percent, with the Dow Jones industrial average (DJIA) closing 205.96 points lower, or 1.34%, at 15,112.27.
The Standard & Poor’s 500 Index (S&P 500), meanwhile, closed 1.39% lower at 1,628.92, while the Nasdaq Composite Index was down 1.12% at 3,443.20.
‘Federal Funds Rate’ – explained in simple terms
On September 18, 2007, the US Federal Reserve (the “Fed”) cut its target Fed funds rate by 50 basis points (half-of-a-percentage point) to 4.75%, giving a boost to stocks markets worldwide.
The Fed also cut its discount rate by another 50 basis points, bringing it down to 5.25%.