FOMC Statement LIVE: No Taper Coming, Stocks Skyrocket

The Fed stuns investors by refusing to commence tapering of bond-buying program. (More to come.)

The Federal Reserve ended its two-day meeting on Wednesday and concluded with the most unexpected decision that it will not begin tapering the end of its bond-buying program, which currently consists of $45bn in Treasuries and $40bn in mortgage-backed securities. The Federal Reserve's open market committee explained its decision in the statement:

"Taking into account the extent of federal fiscal retrenchment, the Committee sees the improvement in economic activity and labor market conditions since it began its asset purchase program a year ago as consistent with growing underlying strength in the broader economy. However, the Committee decided to await more evidence that progress will be sustained before adjusting the pace of its purchases."

Chairman Ben Bernanke will hold a press conference at 2:30pm live-streamed here.

Currently the Fed is engaged in an $85bn monthly bond-buying program, $45bn of which is spent on Treasury bonds, with the remaining $40bn being used to purchase mortgage-backed securities. Though estimates on the possible extent of the taper vary slightly, the consensus among Wall Street's chief economists was that the Fed would trim $10bn-$20bn off the program. 

Stocks and commodities sky-rocketed, with the Dow up over 100 points within seconds of the Fed's announcment. Earlier in the day, equity futures remained flat before the opening bell, while the yield on the 10-year Treasury note had risen five basis points by 9:20am. Within seconds of the statement's release, the yield sunk about 0.1%.

Meanwhile the Fed kept the federal funds rate (also known as the overnight rate because it's the rate at which the Fed lends its depositers money overnight) at 0%-0.25%, which is where it has remained since December 2008. Last year the Fed tied this rate to unemployment, and Bernanke has indicated that this would remain unchanged until the (U-3) unemployment rate drops to 6.5%. The national jobless rate for August was 7.3%. 

The meeting and statement release comes just days after former Clinton Treasury Secretary Lawrence Summers withdrew his name from consideration to replace Bernanke as Fed chairman. That development seems to have paved the way for the nomination of Janet Yellen, the vice chair of the Fed and former San Francisco Fed president.