Last Wednesday, the US Federal Reserve said it would continue its monthly bond purchases valued at USD85 billion for now. This was after expressing concerns that a sharp rise in borrowing costs in recent months could weigh on the economy. The decision had surprised financial markets that were set to reduce the central bank's economic stimulus.
Schwab Center for Financial Research Director of Market and Sector Analysis Brad Sorensen said, "Certainly the Fed wanted to get the message out there that they're still quite accommodative and lean more toward the dovish side at this point in time. Whether the market action from today lasts, that's the longer-term question."
Daiwa Securities America Chief Economist Michael Moran said, "We have a big debate starting in Congress that could have an important influence on the economy and they did not want to move in front of that."
Doubleline Capital LP CEO Jeffrey Gundlach said, "The Fed botched its message in June and is trying to undo that mistake. The data does not suggest that the economy can make it on its own and once stimulus is sent on a lower trajectory it cannot be reversed quickly. Certainly the budget cannot handle higher interest rates."
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