Federal Reserve Meeting

Anticipating the wrap up of 2 days US Federal Reserve meeting, stocks market on both local and internationally react with mixed trend. It is reported that U.S. stocks are edging higher before a key decision by the Federal Reserve on the economy. The Dow Jones industrial average is up 29 points to 13,362 at 11:45 a.m. EDT. The Standard & Poor’s 500 is up two points to 1,439. The Nasdaq composite is up nearly six at 3,120.

Aside from that Most European stocks dropped in trading Thursday morning. Germany’s DAX lost 0.4 percent to 7,312 while France’s CAC-40 was 1.08 percent down at 3,505. Britain’s FTSE 100, however, added 0.7 percent to 5,821.

But basically what could be the result of Federal Reserve meeting ? One of the prediction said that the Federal Reserve will extend its promise of “exceptionally low levels of the federal funds rate” through 2015. When the rate was first cut to zero in December 2008 amid the crisis, the Federal Reserve told markets to anticipate low rates “for some time.” How can a zero short-term nominal interest rate be tight? The best explanation is that interest rates are ambiguous indicators of the stance of monetary policy. To judge the state of monetary policy, one has to look at the market’s expectations for future nominal income. That the Fed is pushing on four years of zero interest rates and extending forward guidance out farther only suggests that policy is all the tighter.

For those who do not know it yet, the Federal Reserve wraps up a two-day policy meeting around noon. Many investors think it will announce a third round of bond-buying to lower long-term interest rates, get people to borrow and spend more and push them into stocks.

But not everybody so grim. Look at below numbers to show you the mixed reaction before US Federal Reserve : European stocks got a big boost on Wednesday after Germany’s highest court rejected calls to block the creation of Europe’s (EURO)500 billion ($640 billion) rescue fund for indebted governments. The creation of the European Stability Mechanism rescue fund for indebted governments could be crucial in containing the European debt crisis that threatens the world economy, and so is participation of Germany, the eurozone’s economic powerhouse.

In other report it said that Italy’s Central Bank on Thursday easily raised (EURO)4 billion ($5.16 billion) at an auction of three-year notes with demand at 1.49 times the offer.Asian stock markets turned in a mixed performance. Hong Kong’s Hang Seng lost 0.1 percent 63. Australia’s S&P/ASX 200 fell 0.5 percent. While for currencies, the euro rose 0.05 percent to $1.2907. The dollar fell to 77.69 yen from 77.87 yen.

Well, let’s just hope that whatever decision made during US Federal Reserve meeting can provide a boost for American economy.