Last month, Federal Reserve (FED), US Central bank announced keeping interest rates unchanged, enhancing chances for December rate hike. The same day, Dow Jones gained 1.1%, the S&P 500 1.2% and the tech-packed NASDAQ composite 1.3%. The two-year treasury notes hiked 9 points, which is the biggest increase in past eight months. The whole global market went up substantially in response to this announcement by Federal Open Market Committee (FOMC) on interest rates.

Currently, the US market is trying hard to deal with FOMC’s statement and plenty of people believe it transmitted the message that US economy was recovering and it also might be a signal for the market to prepare for the contracted monetary policy in December. Since Fed has claimed there was still possibility for a raise in interest rate in December, the two-year Treasury note was up 9 points and ten-year Treasury note was up 6.9 points. On the other hand, the statement has benefited the US Dollar index and it overwhelmed the Euro index.

People still remember the last FOMC conference regarding the interest rate and the decision Fed made to keep the interest rate unchanged. The biggest skepticism was the degeneration of emerging markets, and China in particular. The Shanghai Composite index has almost plummeted 20% in a month and continued another disaster in August, which pulled US market into economic downside. On the other hand, the inflation rate does not accord its Fed’s expectation for raising interest rate. It was the same concern that appeared in Wednesday’s FOMC conference. It also took Fed a moment to see how recent monetary ease in Europe, Japan and China is performing in order to make any further monetary decision. Hence, in the current scenario FOMC’s decision on interest rate is the focal point for financial market.

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