The Federal Reserve held interest rates steady on Thursday and said ongoing strong job gains and household spending had kept the economy on track.
“The labor market has continued to strengthen and ... economic activity has been rising at a strong rate,” the Fed said in its latest policy statement, leaving intact its plans to continue raising rates gradually.
The statement reflected little change in the central bank’s outlook for the economy since the last policy meeting in September, with inflation remaining near its 2 percent target, unemployment falling. and risks to the economic outlook appearing to be “roughly balanced.”
World stocks basked in an eighth straight session of gains in their longest winning streak of the year on Thursday, as reassuring trade data from China kept the previous day's post-midterms risk rally rolling.
The dollar and bond yields also rose, with the dollar pulling away from 2-1/2 week lows hit after President Donald Trump's loss of the House of Representatives in the midterms reduced the chance of another blizzard of tax cuts.
That in turn had analysts and money managers breathing a sigh of relief that the economy wouldn't ultimately overheat and force the Fed to keep jacking up borrowing costs.
"We think we are close to the end of the appreciation of the dollar," said fund manager Amundi's Didier Borowski, who expects the Fed to pause its hiking cycle next year as the economy starts to slow.
"Usually we see a year-end rally (in stocks)" he added.
“This is very much in line with what the market expected," said Brad McMillan of Commonwealth Financial Network after the Fed's announcement. "I see the market today walking back a little from the strong gains yesterday. There’s no real news in the statement.”