Disappointment that the central bank "gave only passing mention to inflation" while continuing to leave near-term rate projections in place likely accounted for selling in the bond market, said Ian Lyngen, head of US rates strategy at BMO Capital Markets.
After the conclusion of its two-day meeting, the FOMC voted unanimously to maintain its interest rates at 1.00 -1.25 percent.
She said the Fed would adjust its policymaking if it thought the causes of low inflation had become permanent. Over the years, it has worked well enough to help cut the unemployment rate to its current low of 4.4 percent. She called this year's inflation undershoot a "mystery". Federal Reserve's job of conducting monetary policy trickier, but it is unlikely to change the Fed's plans of raising rates.
Stocks were set to open flat at 0700 GMT, with the JSE securities exchange's Top-40 futures index barely changed.
Speaking about the unanimous decision, which was made in line with wider market expectations, Nancy Curtin, chief investment officer at Close Brothers Asset Management, said such caution from the U.S. central banks was understandable given the changing composition of its current leadership, a tightening labour market and weak wage growth. However, they are of the opinion that the storms would weigh on the economy only for a short span.
HONG KONG (AP) - Asian shares were mostly lower and the dollar strengthened Thursday after the Fed said it would start trimming its bond holdings and planned one more interest rate increase this year.
Of course, the noise of the Fed's actions only serves to distract from the real issue, which is the continuing economic stagnation of the USA economy.
Bond prices move in the opposite direction of yields.
"The Fed is going to raise rates again in December", Andrew Brenner, the head of global fixed income at NatAlliance Capital Markets, wrote in an email to clients. "The question mark is in whether there will be any hints about the federal funds rate".
"The Committee expects that economic conditions will evolve in a manner that will warrant gradual increases in the federal funds rate; the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run", the Fed said.
According to Sweet, the Fed's GDP forecast for growth this year could be revised slightly higher. The reduction in assets will be slow - just US$10 billion a month to start. "The US is the first to get out".
"The hurricanes will have a significant impact on the data, but not on Fed policy", Slok said via email. Janet Yellen herself does not know whether the slowdown in inflation is transitory or persistent, she simply described the slowdown as a "mystery" and said if the fed view changes on inflation, it would require an adjustment in monetary policy.