90 seconds at 9 am with BNZ: Fed announces QE II lite; Dow closes down; NZ$ holds at 72 USc

Bernard Hickey details the key news overnight in 90 seconds at 9 am in association with BNZ, including news that the US Federal Reserve has annouced plans to stop withdrawing its stimulus to try to restart the stalled US economy.

In a widely  anticipated monetary policy statement released at 6.15 am New Zealand time, the Fed announced it would use capital repayments from bonds it already holds to buy new US Treasuries.

This is seen as a mild version of Quantitative Easing rather than a full second round of Quantitative Easing (QEII).

Some commentators are calling it 'Shock and Yawn' rather than 'Shock and Awe'.

Some commentators, including Goldman Sachs, had called for US$1 trillion worth of money printing and bond buying.

The Fed's more limited plan essentially keeps stimulus already in the system, rather than withdrawing it.

Some commentators estimate the size of the US Treasury buying at around US$340 billion.

The Fed commented that the world's largest economy was not growing as strongly as expected and that inflation pressures remained low.

It also commented it would act again if it thought necessary.

There was one dissenter in the Fed's Open Market Committee from the decision -- Thomas Hoenig.

The Dow closed down 0.5%, but was off its lows before the announcement.

The New Zealand dollar wobbled around the announcement, but was firm around 72 USc in morning trade.