Stock markets opened higher on Thursday following a significant policy announcement by Federal Reserve Chairman Jerome Powell that could keep interest rates lower.
The Dow Jones Industrial Average was up 115 points, or 0.4 percent, and the S&P 500 rose 7 points, or 0.2 percent.
Powell said Thursday that the Fed would move to a system of “average inflation targeting.”
Instead of simply trying to keep inflation within a certain range at a given time, the new policy will give the Fed flexibility to allow for periods of higher inflation following periods of low inflation, so long as the average over the period hit its target.
The shift means interest rates could stay lower for longer, even as inflation started to creep back up.
Markets were also reacting to another report on Thursday morning that initial jobless claims came in above 1 million, though the number ticked down from the previous week. Initial claims have been north of 1 million every week but one in the past 23 weeks as the coronavirus pandemic has closed businesses and Americans stayed at home to avoid being infected.