Wall Street has rallied overnight, pushing the Dow Jones Industrial Average and the Standard & Poor's 500 Index to record highs, after the Federal Open Market Committee unexpectedly left the pace of monthly bond-buying program unchanged at US$85 billion.
In late afternoon trading in New York, the Dow Jones Industrial Average gained 0.83 per cent, the S&P 500 advanced 0.92 per cent, while the Nasdaq rose 0.61 per cent. The Dow touched a record 15,644.82 while the S&P 500 hit a record 1,720.36.
"The Committee sees the downside risks to the outlook for the economy and the labour market as having diminished, on net, since last fall, but the tightening of financial conditions observed in recent months, if sustained, could slow the pace of improvement in the economy and labour market," the Fed said in a statement released at the end of the two-day meeting.
"The Committee recognises that inflation persistently below its 2 per cent objective could pose risks to economic performance, but it anticipates that inflation will move back toward its objective over the medium term," the Fed said. "However, the Committee decided to await more evidence that progress will be sustained before adjusting the pace of its purchases."
The central bank said it now predicts the US economy will expand between 2 per cent and 2.3 per cent this year, down from 2.3 per cent to 2.6 per cent in its June estimates. For 2014, it expects the economy to grow between 2.9 and 3.1 per cent, down from an earlier prediction for between 3.0 per cent and 3.5 per cent.
