The Federal Reserve has announced the end of its monthly $15bn bond-buying programme, adding that its intention is to maintain low interest rates for "considerable time".
The Fed was more bullish on the state of the US labour market, and all its members with the exception of one voted to draw quantitative easing (QE) to a close.
Minneapolis Fed President Narayana Kocherlakota said:
Keeping the current target range for the federal funds rate at least until the one-to-two-year ahead inflation outlook has returned to 2 percent and should continue the asset purchase program at its current level.
Before the Fed's statement, analysts at French bank Société Générale said:
It should be a non-event, and you wouldn't rule out another rise in equity indices around the world given the recent momentum.
The former head of the Fed Alan Greenspan took a radically different view. Speaking hours before the announcement, Greenspan warned that the end of QE could wreak havoc in global markets.
As recently as two weeks ago FOMC member James Bullard said the Fed should consider delaying the end of its QE programme, which led an upswing in global markets after a tough set of losses in October.
The health of the US labour market is still in question despite falling unemployment. Strangely enough, figures out yesterday showed US consumer confidence rose to its highest in seven years in October, but retail and durable goods sales have continued to disappoint
Bullard argued that the strong US dollar could cause the US central bank to miss its inflation target, but there could have been another reason for the timing of his remarks.
Commenting this morning, Michael Hewson of CMC markets, said;
The timing of the intervention spoke to a larger truth, and that was the stock market plunge protection team were still looking at keeping asset prices high.
Despite Bullard's warnings, US markets dropped only slightly on the news, with the Dow falling 0.36 per cent and the Nasdaq dropping 0.78 per cent, while the dollar fell 0.09 per cent against the euro.