HONG KONG: The dollar came under fresh pressure in Asia on Thursday after the Federal Reserve decided against lifting interest rates but the prospect of cheap cash for longer fed another rally in regional equity markets.
At the end of one of its most anticipated meetings for some time, the central bank’s policymakers said the economy continued to improve and the argument for a rise was strengthening but more evidence of sustained progress was needed.
However, while they lowered their growth forecast for this year, the policy committee said the rebound would continue through the second half, and suggested borrowing costs could rise before the end of the year.
The decision to stick to the easy money policy for the time being came hours after the Bank of Japan overhauled its own stimulus programme to target inflation and held off cutting interest rates further into negative territory.
Wednesday’s announcements helped soothe recent investor concerns that the age of cheap cash — which has supported markets for years — could be coming to an end, fuelling talk of an equity correction.
“With both the BoJ and the US Fed doing nothing to upset the apple cart, the markets got what they wanted. And after selling off, have now bounced and look good technically,” Chris Conway, head of research at Australian Stock Report, said.
