18th September 2014 - FOMC Meeting Review

Sept. 18, 2014 - PRLog -- Stock Port Associates is one of the world’s largest and most established offshore investment firms operating within a tax-favorable jurisdiction. Whether it’s dealing with new regulations, setting up an offshore presence, attracting new investors or identifying independent directors, we have the expertise to assist you.

18th September 2014 - FOMC Meeting Review

Major US Indexes:

Dow Jones          17,156.85 (-0.15%)

S&P 500          2,001.57 (+0.13%)

NASDAQ          4,562.19 (+0.21%)

The FOMC completed its 2 day meeting yesterday and afterward its head, Ms. Yellen gave a somewhat vague speech effectively confirming what many analysts already predicted. No change just yet.

Confirmation came that the fed will reduce its asset buying by another $10bn, meaning that it was on target to end its QE next month. The bond buying scheme has almost quadrupled the Central Banks balance sheet to $4.4bn. They also confirmed that they would phase out the reinvestment of the proceeds from the bond holdings until after rates had been raised, so long as the economy was strong enough.

Using the slack in the employment market as the main reason for holding off on the increase the benchmark rate of near zero has been in effect since December 2008.

They did however update their forecasts for rates over the next 3 years and this was slightly out of line with what some commentators expected. Rates should be at 1.375% by the end of 2015, 2.875% at the end of 2016 and 3.75% at the end of 2017. Consensus was that the rates for 2015 and 2016 would be slightly lower by about 0.2% across the board.

With the US economy posting good growth of late and its Federal Reserve being the only Central Bank looking to exit its stimulus program it is fair to say that the US is outperforming its western peers at this time. Compared to Europe who are just about to enter the same territory as the US did over 5 years ago is a concern for Europeans but good news for Americans.

The major US indexes were relatively mute on the news, probably due to the vote taking place in the UK to see whether Scotland will devolve form the United Kingdom. The US's exposure to the UK's markets is substantial and although the vote is too close to call at the time of writing, many investors will be cautious until clarification on the situation is seen later today.

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