The Dow Jones Industrial Average and the S&P 500 closed at record highs Wednesday after the Federal Reserve said it expects its key interest rate to remain near zero through 2023. The central bank’s commitment to keeping rates at rock bottom lows comes even as it forecasts the economy will accelerate quickly this year. Wall Street has been anxious about the potential for higher inflation and has been looking for signs that the central bank shares investors’ concerns, the AP reports. The S&P 500 rose 11.41 points, or 0.3%, to 3,974.12. The Dow Jones Industrial Average rose 189.42 points, or 0.6%, to 33,015.37. The Nasdaq rose 53.64 points, or 0.4%, to 13,525.20.
The Fed on Wednesday significantly upgraded its forecasts for growth and inflation. It now expects the economy to expand 6.5% this year, up sharply from its previous projection in December of 4.2%. And the Fed raised its forecast for inflation by the end of this year from 1.8% to 2.4% after years of chronically low price increases. The Fed also said it would continue its monthly purchases of $120 billion in bonds, which are intended to keep longer-term borrowing costs low. T he closely watched yield on the 10-year Treasury note, which has surged in recent weeks on inflation concerns, declined slightly. Still, the Fed's upgraded forecasts raised questions about what would cause it eventually to raise its key short-term rate, which affects many consumer and business loans.
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