Stocks fly on Fed's rate-pause hint

U.S. stocks soared as investors interpreted the Federal Reserve's long-awaited policy statement as a signal the central bank may pause after its latest interest-rate increase. While the central bank's quarter-percentage point increase to the benchmark federal funds rate to 5.25 percent was widely expected on Wall Street, the Federal Open Market Committee also said moderating economic growth could limit inflation going forward.

"The market is clearly telling us that it thinks this could be the end of the Fed tightening cycle. The Fed appears to at least be admitting that the economy is slowing down," said John Norris, chief economist and senior fund manager at Morgan Asset Management in Birmingham, Alabama. "The market really seems to like it."

(2006-07-01 00:00:07 SGT) [Biz] Permalink

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