The US markets ended higher on Wednesday after the Federal Reserve announced its decision to leave interest rates unchanged after three straight rate cuts. The Fed said its Federal Open Market Committee decided to maintain the target range for the federal funds rate at 1-1/2 to 1-3/4 percent on the heels of three straight quarter-point reductions. The decision was widely anticipated, although the Fed's economic projections provided along with the announcement also showed a majority of meeting participants now expect interest rates to remain on hold throughout 2020. Fed Chairman Jerome Powell suggested that he would not consider raising rates until inflation picks up significantly. The Fed downwardly revised its forecast for core consumer price growth in 2019 to 1.6 percent from 1.8 percent, while the inflation estimates for the next three years were unchanged. In its accompanying statement, the Fed said the current stance of monetary policy is appropriate to support a sustained economic expansion, strong labor market conditions, and inflation near its symmetric 2 percent objective.
On the economic data front, a report released by the Labor Department showed consumer prices in the U.S. increased by slightly more than anticipated in the month of November. The Labor Department said its consumer price index rose by 0.3 percent in November after climbing by 0.4 percent in October. Street had expected prices to edge up by 0.2 percent. The bigger than expected increase in consumer prices partly reflected continued growth in energy prices, which climbed by 0.8 percent in November after spiking by 2.7 percent in October. Gasoline prices jumped by 1.1 percent. Excluding food and energy prices, core consumer prices crept up by 0.2 percent in November, matching the uptick seen in the previous month as well as street estimates. A 0.3 percent increase in prices for shelter contributed to the growth along with higher prices for medical care, recreation, used cars and trucks and apparel.
Dow Jones Industrial Average surged 29.58 points or 0.11 percent to 27911.30, Nasdaq gained 37.87 points or 0.44 percent to 8654.05 and S&P 500 was up by 9.11 points or 0.29 percent to 3141.63.
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