Wall Street Suffers After Fed Statement
U.S. stock indexes saw their worst day in over a month on Wednesday, after the Federal Reserve signaled that it wasn’t likely to raise interest rates or lower them, as U.S. President Donald Trump demanded, in the coming months. In a news conference following the Fed’s two-day policy meeting, Fed Chair Jerome Powell used the term “transitory” to describe the country’s inflation, not “persistent,” and that the central bank would reconsider a policy move if inflation became persistent. The policy decision announced yesterday was unanimous.
The Fed’s inflation target is 2 percent, and though the core value watched by the Fed fell to 1.6 percent in the first quarter of 2019, Powell commented that “we suspect transitory factors may be at work.” In other words, Powell hinted that the Fed expects inflation to return to its target naturally over time, which precludes the need for a policy change at the moment. “We think our policy stance is appropriate at the moment; we don’t see a strong case for moving it in either direction,” Powell said. He also confirmed that he sees the U.S. economy on a “good path for this year.”
The S&P 500 closed down 0.75 percent on Wednesday, its steepest daily decline since March. The NASDAQ was 0.57 points lower and the Dow Jones Industrial Average fell 0.61 percent on the day.
Asian markets were trading mostly higher on Thursday, despite the turnaround on Wall Street. The Shanghai Composite was up 0.52 percent as of 2:11 p.m. HK/SIN, and the Shenzhen Composite was up 0.68 percent. South Korea’s Kospi gained 0.44 percent. Hong Kong’s Hang Seng Index was up 0.66 percent. Australia’s ASX 200 was the biggest index to decline, trading down 0.66 percent.