The equities market and stock exchange traded funds jumped after the Federal Reserve announced it will be standing pat on record low U.S. interest rates for now in light of the weak economy, stubbornly low inflation and unstable global markets.
Fed officials voted nine to one in favor of keeping current interest rates, stating Thursday that global pressures may “restrain economic activity” and continue to drag on inflation, according to the Associated Press.
The Fed’s measure of inflation was at 1.2% in the latest reading, or below the 2% target for over three years.
In an updated economic forecast, 13 of 17 Fed policymakers believe there will be a rate hike sometime this year, whereas 15 Fed officials predicted a rate hike this year back in June. Additionally, the forecast diminished the number of rate hikes to reflect expectations of just one quarter-point raise, compared to two expected hikes at the June meeting.
The dovish stance triggered a market rally late Thursday, with assets that are sensitive to changes in the Fed interest rate leading the charge.
Among the top performing ETFs Thursday, the ALPS Medical Breakthroughs ETF (NYSEArca: SBIO), which focuses on small- and mid-cap companies that have one or more drugs in either Phase II or Phase III U.S. surged 4.2%, and the SPDR S&P Biotech ETF (NYSEArca: XBI), which tracks an equal-weight index of biotechnology companies, gained 2.3%.