Asian stock markets were mostly lower this morning as investors registered dismay at the path chosen by the Federal Reserve to try to invigorate the stalled US recovery.
At the end of a two-day policy meeting yesterday, the Fed said it was extending a programme called Operation Twist, under which the Fed swaps short-term bonds for longer-term ones to help keep long-term interest rates low.
But analysts said the programme's extension might not provide much benefit. Businesses and consumers who are not borrowing now are not that likely to change their minds just because rates dropped a little more.
Stan Shamu of IG Markets in Melbourne said in a market commentary that investors were "disappointed" that the Fed had not chosen to embark on a third major round of bond purchases, known as quantitative easing.
Such purchases would lower rates even further. The Fed has completed two such programmes, buying more than 2 trillion dollars in Treasury bonds and mortgage-backed securities, to help prop up the economy.
"Sentiment also dampened after the Fed cut estimates for economic growth on the back of a slowing jobs and tough credit markets," Mr Shamu said.
Japan's Nikkei 225 index rose 1% to 8,836.69. Hong Kong's Hang Seng lost 0.6% to 19,389.07 and South Korea's Kospi lost 0.7% to 1,891.23. Australia's S&P/ASX 200 fell 0.6% at 4,106.90.
Oil prices retreated overnight, putting pressure on energy shares. South Korea's S-Oil Corp. fell 2.1%. China National Offshore Oil Corp dropped 3.1%. Australia's Woodside Petroleum lost 2.3%.
US stocks fell slightly yesterday after the Federal Reserve cut its estimate for economic growth for the year.
The Dow Jones industrial average fell 0.1% to close at 12,824.39. The Standard & Poor's 500 index fell 0.2% to 1,355.69. The Nasdaq composite rose marginally to 2,930.45.
Benchmark oil for August delivery was down 87 cents to $80.58 per barrel in electronic trading on the New York Mercantile Exchange. The contract dropped $2.23 to close at $81.80 per barrel in New York yesterday.