Fed Meet Opens, Markets Higher On Dow Rebound

Fed spokesman Joseph Coyne said the Federal Open Market Committee meeting opened as scheduled at 0900 EDT/1300 GMT. An announcement of its outcome was expected about 1415/1815. A thin majority of economists surveyed by Reuters on Monday said they expected the US central bank to decide to bump up short-term rates by a quarter percentage point, the first such increase since February 1995, to keep potential inflation pressures in check.

Meanwhile, European bourses generally recovered their composure yesterday after a sharp overnight rebound on Wall Street, which surfaced from an early 50 point dive to close slightly up.

London, Frankfurt and Paris, which all closed well down on Monday and London suffering its biggest drop in two months, opened higher on Tuesday, although London fell back later.

 

The Dow ended up 6.28 points at a record 5,894.74.

But stock and currency markets were effectively holding their breath ahead of the FOMC meet later in the day.

Dealers and analysts were deeply divided over whether the FOMC committee would sanction a credit tightening after the meeting, the outcome of which would not be known until after European markets closed. If the Fed decided to increase interest rates, it would be the first rise for 1-1/2 years.

British stocks lost their opening gains and were trading near the day's lows by late morning.