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US stocks gain as Fed keeps rates unchanged

New York: US stocks posted solid gains as the US Federal Reserve left its federal funds rate unchanged after the conclusion of its two day policy meeting.

The Dow Jones Industrial Average on Wednesday added 163.74 points, or 0.90 per cent, to 18,293.70. The S&P 500 leapt 23.36 points, or 1.09 per cent, to 2,163.12. The Nasdaq Composite Index increased 53.83 points, or 1.03 per cent, to 5,295.18, Xinhua news agency reported.

“The Committee judges that the case for an increase in the federal funds rate has strengthened but decided, for the time being, to wait for further evidence of continued progress toward its objectives,” the Fed’s policy-making committee said in a statement released on Wednesday after its two-day meeting.

The Fed’s updated projections released Wednesday showed that policymakers expected the federal funds rate to rise to around 0.625 per cent at the end of 2016, implying one rate hike this year, down from two estimated in June.

The Fed also said in the statement that near-term risks to the US economic outlook “appear roughly balanced,” a further sign that the central bank could raise rates by the end of this year.

“The FOMC (Federal Open Market Committee) thinks another rate hike is needed soon, but participants’ thinking on the pace of tightening and ultimate level of rates when tightening is done continues to fall,” said Chris Low, chief economist at FTN Financial, in a note.

The Fed will hold its next two policy meetings on November 1-2 and December 13-14.


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