Don’t Fight the Fed!

The US Federal Reserve gave us two reasons to be cheerful yesterday. First they see the US economy continuing to grow, but secondly and importantly they do not see this as an ‘overheating’ situation despite gains in the equity and property markets intimating that they will keep interest rates at current levels into 2015. They trimmed their bond-buying by $10 billion for a fifth straight month with the accompanying statement “Economic activity is rebounding in the current quarter and will continue to expand at a moderate pace thereafter,” and that they expect interest rates to stay low for a ‘considerable time’ after the bond-buying ends. The US S&P500 equity closed up 0.75% at a new all-time high following the upbeat statements.