A day after the Federal Reserve decided not to raise interest rates, stocks plunged, with the Dow dropping almost 290 points by the close.

The Fed Committee will be meeting again next month and further in December.

OIL DOWN: The price of USA crude fell $1.39 to $45.53 a barrel on concerns over the slowing global economy.

There are a tremendous number of moving pieces in the Fed decision to leave rates unchanged.

Traders are now betting on the outcomes of the Fed’s October and December meetings – odds of a move higher are 18 per cent and 46 per cent, respectively. “Without an interest rate hike, there is a good chance that we could slide back in a recession locally and nationally”. “The question is whether there might be the risk of a more abrupt slowdown than we expect”.

Responding to the decision to hold rates, Lee McDarby, managing director of corporate foreign exchange and global payments at moneycorp, said: “It became clear that the markets believed the likelihood of a U.S. interest rate hike had decreased, and on that basis the dollar gradually weakened”.

The continuation of the Fed’s ultra-low-rate policy likely means that rates on mortgages and auto loans will remain low.

“China was an influence in this meeting, whereas in the past that would have been much less important”, Hong Kong-based JPMorgan Asset Management chief Asia market strategist Tai Hui (許長泰) said. Fed funds futures signal the rate moving to 0.23 percent by year-end. “But we expect the upside to be limited…as long as the Fed does not communicate that there will be no hikes for the time being, the tightening cycle continues to hang over the market”.

The Fed also forecast that inflation would creep only slowly toward its 2% target, which could be seen as a negative for gold, often bought as an inflation-hedge.

The decision by the USA central bank to forgo an interest rate hike was “appropriate”, Japan’s top spokesman said Friday. Investors are betting that the Fed “won’t be able to raise rates until next year, if at any time in the near future”.

The New Zealand dollar rose, and is heading for a 1 percent weekly gain, as increases in dairy prices at the third straight GlobalDairyTrade auction and a more dovish US Federal Reserve helped lift the currency from its recent lows.