The central bank ditched the U.S. unemployment rate as a barometer of measuring the health of the economy, and disclosed that it would instead base its decisions on interest rates on a wider range of measures.
Equities continued falling after Yellen added that the “considerable period” between the first rate increase from the central bank and the winding down of its quantitative easing program (QE) may be six months.
With most analysts forecasting the QE program to end near the end of the year, a six-month interval would shift the period when the Federal Reserve will announce the interest hike, which most economists have expected to be done in the other half of 2015.
“She certainly moved it up a little bit, and I don’t think the market was expecting that at all because she is widely viewed as being more on the dovish side of the aisle than she is on the hawkish side,” said Peter Kenny, the New York-based CEO of Clearpool Group. “That is not a particularly hawkish comment, but the fact of the matter is, it was not expected.”
The Federal Reserve also revealed that it will scale down its monthly buys of U.S. mortgage-backed securities and Treasuries from $65 billion to $55 billion.
The NASDAQ Composite IXIC fell 0.59 percent to close at 4,307.602; while the S&P SPX fell 0.61 percent to stand at 1,860.77, as the Dow Jones Industrial average dropped 114.02 points, or 0.7 percent, to finish at 16,222.17.
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