(Reuters)

A gauge of global stocks gained on Wednesday (March 17) and the US dollar slid after the Federal Reserve repeated its pledge to keep its target interest rate near zero for years to come.

The yield on the benchmark US Treasury note, whose surge has roiled markets in recent weeks, fell back after hitting its highest level since January 2020 ahead of the highly anticipated statement from the central bank.

The Fed projected a rapid jump in US economic growth and inflation this year as the COVID-19 crisis winds down.

“In our view, the combination of still low yields, very slow and gradual normalisation of policy, and the improving economic outlook, remains a positive mix for risk assets,” said Willem Sels, chief investment officer, Private Banking and Wealth Management at HSBC.

On Wall Street, major indexes moved higher, with the S&P 500 posting a record high close, after the Fed statement and news conference.

Fed Chair Jerome Powell stressed the rosier outlook did not mean the Fed would now remove its support for the economy, with the nation still 9.5 million jobs short of where it was before the emergence of COVID-19 and inflation below the Fed’s target.

The Dow Jones Industrial Average rose 189.42 points, or 0.58 per cent, to 33,015.37, the S&P 500 gained 11.41 points, or 0.29 per cent, to 3,974.12 and the tech-heavy Nasdaq Composite added 53.64 points, or 0.4 per cent, to 13,525.20.

“The Fed statement today was more optimistic than some expected, they raised their outlook for both economic growth and the labor market,” said David Carter, chief investment officer at Lenox Wealth Advisors in New York. “The market’s view of the statement is that it was fairly optimistic.”

The pan-European STOXX 600 index lost 0.45 per cent and MSCI’s gauge of stocks across the globe gained 0.24 per cent, after falling earlier in the session.

The benchmark 10-year Treasury note, last fell 4/32 in price to yield 1.6374 per cent, from 1.623 per cent late on Tuesday. It touched 1.689 per cent, its highest level since January 2020, during the session.

The US dollar fell after the Fed said it does not expect to raise interest rates through all of 2023, contrary to market expectations.

In currencies trading, the dollar index fell 0.518 per cent, with the euro up 0.66 per cent to $1.1979.

“There’s no indication that the Fed is preparing to act on rising inflation or the stronger economy we’ve been seeing,” said Kim Rupert, managing director of global fixed income analysis at Action Economics in San Francisco.

The Russian rouble slid versus the dollar after President Joe Biden said his Russian counterpart Vladimir Putin will “pay a price” for efforts to meddle in the 2020 US presidential election.

Oil slipped for a fourth day, weighed down by expectations of weaker demand in Europe and by rising US crude inventories.

Brent crude settled down 39 cents, or 0.6 per cent, at $68 a barrel while US West Texas Intermediate (WTI) crude dropped 20 cents, or 0.3 per cent, to end at $64.60.