Fed making room for higher inflation to help economy

US STOCKS rose last week and the Standard & Poor's 500 finished at a new record high as the US Federal Reserve formally overhauled its mission, saying it would allow inflation to run hot so it could maximise efforts to jump-start the economy.

"The market is interpreting that as a sign they are going to keep interest rates near zero for a very long time," said Oliver Pursche, an independent market strategist.

"That benefits buyouts, that benefits leverage, that benefits mortgage rates, that benefits all kinds of (financial risk)."