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Bank of England and Federal Reserve stimulus gets lukewarm response from markets
The US Federal Reserve announced "Operation Twist", which will see the central bank buy $400bn of government bonds with longer maturities and sell the same amount of shorter maturities. Hours earlier, the Bank of England delivered its clearest signal yet that it is poised to restart quantitative easing. But with both the Fed and the Bank of England having already deployed much of their ammunition since the crisis started, investors focused on the deteriorating outlook that's forcing the fresh stimulus. The FTSE 100 closed down 75.2 points at 5,288.41, while the S&P 500 endured its worst day in a month, closing down 2.9pc at 1,166,76. The Dow Jones Industrial Average fell 2.5pc to 11,124.80. Minutes of September's meeting of the Bank's Monetary Policy Committee (MPC) showed the MPC believes the growth outlook has weakened to such an extent that the risks to inflation have "clearly increased" to the downside and that further stimulus would be needed. Posted by: lotp 2011-09-22 |
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