Federal Reserve

Gartman: 'Never thought Fed would take action'

Santa Claus rally is here: Gartman

Influential investor Dennis Gartman told CNBC he was surprised by the U.S. Federal Reserve's decision to start winding down its stimulus program.

"I never thought they'd take action yesterday," the founder of the closely-watched "Gartman letter" told CNBC Europe's "Squawk Box" on Thursday. "I thought there would be a lot of rhetoric about the level of debate, about the fact that the economic numbers were in fact getting better. But I never actually thought they'd move to reduce the speed with which we're driving down the highway."

The U.S. central bank's monetary policy committee decided on Wednesday to start winding down its bond buying program but will do so gradually, trimming its monthly asset purchases by $10 billion to $75 billion from January onwards.

It sought to temper the market impact of the policy move by suggesting its key interest rate would stay near zero "well past the time" unemployment falls below 6.5 percent.

Despite his surprise, Gartman believed that U.S. economic conditions warranted a reduction in asset purchases. "I would say that the economic conditions have been for some while appropriate for a reduction in the sum of accommodation – that's the term the Fed uses, not tapering – but I was surprised by the fact that the decision was made. "

"I thought it would be deferred and put into the hands of the next Fed chairman [Janet Yellen] at the March meeting," he added, referring to the fact that this policy decision was the last to be made under the aegis of Chairman Ben Bernanke who steps down from the role at the end of January.

The Fed's decision propelled the Dow and S&P 500 to new record highs, while the Nasdaq ended at a 13-year high and the dollar leaped to a more than five-year high against the yen. Globally, Asian stocks were mostly higher on Thursday and European stocks look set to follow suit.

Investors have been factoring in a taper to the U.S. monetary stimulus, which has buoyed global equity markets, ever since Bernanke first mentioned the possibility that the central bank would be winding down its bond-buying program in May. That sparked volatility -- or so-called "taper tantrums" -- in equity, currency and bond markets.

(Read more: Taper seen as positive for economy, bad omen for bonds)

"I'm not surprised that the stock market took off, that the dollar got that strong, that gold fell. Once the announcement was made, those actions were pre-destined," Gartman said.

Having been bullish on stocks for some time, Gartman said he was cautious ahead of the Fed's announcement though he wished he "remained as manifestly, overtly and violently bullish" on stocks as he had been previously.

"Within seconds of the announcement… I had no choice - I had to come in and buy more stocks and reduce any hedges I had and make certain that the long positions I had in the dollar – I've been very bearish on the yen -- were increased."

There was "no question," Gartman added, that "an abundant part of yesterday's panic buying [was due to] people saying 'Oh my word I'm short, I'm wrong and I have to get out'…Some of the smartest guys I know have been short the market all the way up and I've seen more of that than people being long the market."

Gartman said there was no question that the "Santa rally" – a seasonal market rally -- was upon us and "was likely to continue."

- By CNBC' Holly Ellyatt, follow her on Twitter @HollyEllyatt