Instant view: Fed says no rate hikes until at least late 2014

Wed Jan 25, 2012 12:58pm EST
 
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NEW YORK (Reuters) - The U.S. Federal Reserve on Wednesday said it will not raise interest rates until at least late 2014, even later than investors expected, in an effort to support a sluggish economic recovery.

COMMENTS:

RICHARD FRANULOVICH, SENIOR CURRENCY STRATEGIST, WESTPAC, NEW YORK

"The Fed statement has a dovish flavor to it since the Fed has pushed out keeping rates exceptionally low until late 2014. That's why we are seeing the dollar sell off and yields push lower. The Fed recognizes that the U.S. economy is recovering, but it's not fast enough to push unemployment to acceptable levels. Overall, it would seem like the Fed statement is a risk-on signal. But I wouldn't be comfortable buying the euro because of issues with Greece. I would instead buy the Aussie and Canadian dollar versus the U.S. dollar."

SEAN INCREMONA, ECONOMIST, 4CAST LTD, NEW YORK

"The Fed statement saw little changes to current economic conditions and to the tone regarding the outlook in which "significant" downside risks remain.

"While policy remained unchanged, rate guidance was the more pertinent issue ahead of the release of the rate projections later this afternoon. In this respect, rates are now seen unchanged through at least late 2014, well past the original mid-2013 guidance.

"The continued dovish tone from the Fed remains intact, which suggests that further Fed releases today should attempt to drive home the point that policy will remain extremely accommodative for quite some time in this environment and there are additional prospects for further action."

JOHN CANALLY INVESTMENT STRATEGIST AND ECONOMIST FOR LPL FINANCIAL IN BOSTON   Continued...