By James Langton
(October 5 – 14:30 EST) – The
U.S. Federal Reserve Board has done
what was expected of them. They’ve
left interest rates unchanged.
It has moved its bias to
“tightening,” although the Fed
cautioned that the bias change
shouldn’t be met with the
expectation of a near-term
tightening.
Most traders and economists
predicted no change on rates.
Opinions were mixed on whether
the Fed would move to a tightening
bias, thereby hinting at a rate
increase at the November 16th Fed
meeting.
Yet the Fed has made it clear
that it is not making a “commitment
to a near-term move”, in an effort
to prevent an histrionic reaction
from traders. Otherwise the spectre
of a rate increase will hang over
the markets until the November
meeting – the speculation being
that it will be the Fed’s last
chance to raise rates before the
end of the year when Y2K liquidity
concerns will be paramount.
The Dow was up about 100 points
just before the decision. Nasdaq
was up 37 points. The TSE was off
by about 15 points.
All markets started falling
after the announcement. The Dow,
which was at its intraday high
just before the announcement,
dumped its gain. The Nasdaq seems
to bottoming at about 15 points to
the upside.
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