US Fed Reserve leaves stimulus programme in place
WASHINGTON (REUTERS) - The United States (US) Federal Reserve said on Wednesday that it would continue buying bonds at an US$85 billion (S$106 billion) monthly pace for now, expressing concerns that a sharp rise in borrowing costs in recent months could weigh on the economy.
The decision surprised financial markets, which were braced for a modest cut in the central bank's economic stimulus, and Fed Chairman Ben Bernanke refused to commit to a tapering of purchases later this year, as he had previously suggested.
"There is no fixed calendar schedule. I really have to emphasise that," he told a news conference. "If the data confirm our basic outlook, if we gain more confidence in that outlook... then we could move later this year."
Stocks rallied on the US central bank's decision, with the S&P 500 index hitting a record high. The dollar fell to a seven-month low against the euro, while prices for US government bonds rose sharply. The price of gold, a traditional inflation hedge, also shot higher.