Markets have jumped hard today on a variety of good news for equities. The Nasdaq has reached a level not seen since the dotcom boom of 2000 and both the S&P 500 and the Dow have also jumped up in early trading today.
Investors have reacted positively to the latest news from the Fed that the economy is firming up and while it is looking like rates are going up, the central bank is not quite ready to boost them just yet and may let the economy run a bit more before easing off the throttle.
Highlights from the Fed’s latest FOMC meeting included the following:
Economic activity has been expanding moderately after having changed little during the first quarter. The pace of job gains picked up while the unemployment rate remained steady.
Market-based measures of inflation compensation remain low; survey-based measures of longer-term inflation expectations have remained stable.
The Committee expects that, with appropriate policy accommodation, economic activity will expand at a moderate pace, with labor market indicators continuing to move toward levels the Committee judges consistent with its dual mandate.
Inflation is anticipated to remain near its recent low level in the near term, but the Committee expects inflation to rise gradually toward 2 percent over the medium term as the labor market improves further and the transitory effects of earlier declines in energy and import prices dissipate.
The Committee today reaffirmed its view that the current 0 to 1/4 percent target range for the federal funds rate remains appropriate. In determining how long to maintain this target range, the Committee will assess progress–both realized and expected–toward its objectives of maximum employment and 2 percent inflation
The Committee anticipates that it will be appropriate to raise the target range for the federal funds rate when it has seen further improvement in the labor market and is reasonably confident that inflation will move back to its 2 percent objective over the medium term.
The Committee currently anticipates that, even after employment and inflation are near mandate-consistent levels, economic conditions may, for some time, warrant keeping the target federal funds rate below levels the Committee views as normal in the longer run. (emphasis added)
