No change. But change coming someday. (Not soon, though.)
That was the message from today’s meeting of the Federal Reserve’s Open Market Committee.
The central bank held interest rates steady at 0% to 0.25% and maintained its schedule for purchases of Treasuries and mortgage-backed assets at $120 billion a month
But the Fed has begun talking about how to reduce its month bond purchases. That would be the first step in changing monetary policy.
“We’re not there. And we see ourselves as having some ground to cover to get there,” Fed chair Jerome Powell told a press conference after the meeting. “The economy has made progress toward these goals, and the committee will continue to assess progress in coming meetings,” the Federal Open Market Committee said in its policy statement. The FOMC vote was unanimous.
I think the quote to Bloomberg sums up the day’s non-news from the Fed: “The Fed is starting the clock on tapering. It is not happening now or even in September, but expect the pace of asset buying to slowdown late this year or early next,” Neil Dutta, head of U.S. economics at Renaissance Macro Research, said.
The Fed also repeated its belief that the rise in inflation reflects largely “transitory factors.”
Today the Standard & Poor’s 500 closed down 0.02% and the Dow Jones Industrial Average dropped 0.36%. The NASDAQ Composite rose 0.70% and the NASDAQ 100 picked up 0.41%. The big index winners on the day were the small cap Russell 2000, up 1.51%, and the iShares MSCI Emerging Markets ETF (EEM), which gained 2.71% on big gains in China as government officials said reassuring things about market stability.
Alibaba (BABA) gained 5.34% and Tencent Holding (TCEHY) advanced 4.81%. JD.com (JD) moved ahead 8.51% and Meituan (MPNGF) rose 15.65%. Battered Didi Global (DIDI) was up 10.32%.