Fed message a boon for stocks, not for job seekers
The purchases are designed to keep long-term loan rates low to spur borrowing and spending.
Yet for savers who rely on interest income, Wednesday's announcement was a sour one. The Fed also sent an ominous message to job seekers: Hiring and economic growth remain sluggish and vulnerable to further weakening from budget fights in Washington.
How some individuals and groups could be affected by the Fed's decision:
Driving up stock prices is part of the Fed's plan. That's because as stock prices surge, Americans who own stocks feel wealthier and more willing to spend.
Borrowers. The Fed's bond purchases benefit borrowers by pushing down long-term interest rates. The yield on the benchmark 10-year Treasury note dropped sharply after the Fed announcement. Rates on mortgages and many other consumer and business loans tend to parallel the 10-year Treasury's yield.
Emerging markets. When U.S. rates were super-low, investors had moved money into emerging markets in search of relatively higher returns. In recent months, though, the prospect that the Fed would slow its bond purchases and send U.S. rates up led investors to shift money out of emerging markets. Wednesday's reprieve by the Fed sent stocks soaring 4.7 percent in Indonesia and 7 percent in Turkey.
Savers. Super-low rates have squeezed people who depend on interest income. Americans' annual interest income fell 11 percent - from $1.36 trillion to $1.21 trillion - between 2008 and 2012, the Commerce Department says.
The annual percentage yield on the average U.S. money market account is 0.1 percent, according to Bankrate.com.
Job seekers. The Fed's message offered scant hope for people looking for work. It expects unemployment to remain a still-high 6.4 percent or higher through next year.
"We're still not satisfied, obviously, with where the labor market, the job market is," Federal Reserve Chairman Ben Bernanke said.
He noted many job seekers had grown discouraged and quit looking for work.