Finally, the U.S. economy is registering a blip on the radar screen. The Fed said Wednesday that the economy is finally beginning to grow and promised not to raise interest rates in the near future.
In a statement released this week, the U.S. Federal Reserve said that August data “suggests that economic activity has picked up following its severe downturn. Conditions in financial markets have improved further, and activity in the housing sector has increased.”
U.S. government bond yields ended lower on the news that the central bank had reiterated a pledge to keep rates ultra-low for an extended period.
“I think it confirms that the economy still needs a little bit of help and that rates aren’t going to go up anytime soon,” said Alan Lancz at Alan B. Lancz & Associates in Toledo, Ohio.
But a stock market rally fizzled on concerns the Fed was setting the stage to pull back from its efforts to stimulate the economy. “There’s still a lot of problems with mortgages, the housing market in general as well as the banking sector,” said Dan Faretta, a market strategist at Lind-Waldock brokerage firm in Chicago.