Key points:

  • After phasing down its quantitative easing (QE) program all year the US Fed has finally ended it. Monetary tightening still looks unlikely until mid-next year at the earliest and is contingent on further improvement in the economy and higher inflation.

  • QE has worked – the US economy is now well into expansion mode and looking a lot stronger than Europe and Japan that have taken longer to adopt it.

  • While the ending of QE could contribute more volatility to shares it has largely been anticipated. With the US likely to continue growing & monetary conditions expected to remain easy for some time to come the cyclical bull market in shares likely has further to go.

  • The ending of US QE is also positive for Australia as it is a sign that the world’s biggest economy is better and removes a source of upwards pressure on the $A.

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