Sino Link Japan comments on Fed leaving rates unchanged, stocks gains and greenback dropping

LONDON - Oct. 3, 2016 - PRLog -- The expected number of rate increases by Fed policymakers had previously been two, which was now cut to one according to the post-meeting statement. There were also clear indicators that the central bank could tighten monetary policy as we get closer to the holiday season.

If median predicted forecasts are accurate, the Fed said they expect rates to rise less aggressively in the next two years.

Following an increase in borrowing costs for the first time in 10 years last December, the central bank has held its rate for bank overnight lending between 0.3 and 0.5 percent.

"We are pretty happy the Fed didn't decide to dramatically raise interest rates," said Michael Richmond, Senior Vice President at Sino Link Japan in a recent interview.

"Possibly people were expecting a more hawkish hold from them. It was a lot milder than that. It is good to see the Fed don't have their finger on the trigger, no-one wants to see chaotic ups and downs," Richmond added.

On the same day the Bank of Japan (BOJ) announced they would change their fiscal strategy to focus more on interest rates. The base money target is now gone, to be replaced with an effort to control the yield curve as the bank purchases more bond assets. The idea is to keep the benchmark 10-year yields stable at zero percent, where they are currently.

The negative 0.1 interest rate remained unchanged after many analysts feared the BOJ would deepen the figure.

The S&P 500 rose 1 percent to 23.37 points while the Dow Jones industrial average also gained 1 percent to 18,294.6. The Nasdaq Composite closed up 53.84 points, or 1.05 percent, at 5,295.19, its highest point ever.

Europe's STOXX 600 finished up 0.5 percent and the MSCI's all-country world stock index gained 1.2 percent, assisted by rising E.U. banking stock.

There was also a pleasant surprise on the gold market, with fortnightly highs following the Fed statement.