The US Fed voted to end its massive stimulus package in October but cautioned that it will not raise interest rates for a considerable time.
The move to end quantitative easing was announced by Fed chairman Janet Yellen in a press conference following a two-day meeting of the Fed’s policy committee.
Markets had been largely expecting the decision to remove stimulus.
However the Fed proved more cautious on any imminent interest rate rise stating that there would be no “calendar date” for raising rates.
Yellen said the Fed would only look to increase interest rates a “considerable time” after the end of QE.
Interest rates in the US have been kept at zero since the end of 2008.
“The Committee reaffirmed its forward guidance that it likely will be appropriate to maintain the current target range for the federal funds rate for a considerable time after the asset purchase program ends, especially if projected inflation continues to run below the Committee’s 2 percent longer-run goal, and longer-term inflation expectations remain well anchored,” Yellen said.
US stocks were buoyed by the Fed announcement with the Dow Jones closing at a record high yesterday evening.