During its recent meeting, the Board of Governors of the Federal System said that interest rates do not need to be raised due to the current state of the economy, prompting them to hold rates near zero in the short term while considering a slight inflation in the medium term. Moreover, the information derived from the Federal Open Market Committee (FOMC) meeting back in July also suggests that the economy is growing, albeit at a “moderate pace.”
In response the announcement, Wall Street tumbled slightly. The Dow Jones Industrial Average fell by 0.39% or 65.21 to 16,674.74. Furthermore, the S&P 500 also dropped by 0.26% or 5.11 points to 1,990.20. Meanwhile, the Nasdaq Composite went up slightly by 0.1% or 4.71 points to 4,893.95.
The S&P 500 telecom services sector dropped by 1.09% while the information technology sector is also down by 0.68%. At the same the time, the energy sector experienced a slight decline of 0.04%. In addition, the S&P 500 financials sector also dipped by 4.15 or 1.31%. Meanwhile, the consumer staples, consumer discretionary, utilities and health care sectors experienced slight increases.
According to the Federal Reserve’s latest projections, the real GDP is expected to grow modestly between 1.9 to 2.5% this year while growing slightly higher at 2.1 to 2.8% in 2016. In addition, there have been some improvements seen in household spending as well as business fixed investments. Net exports, although performing, have been rather “soft.”
The FOMC is due to meet again October 27 to 28 and December 15 to 16.