The Toronto Stock Exchange's S&P/TSX composite index ended up 77.03 points, or 0.4%, at 21,342.13, its highest ever closing level.
"The anticipated Fed taper was bound to be a buying opportunity," said Matt Skipp, president of SW8 Asset Management.
"The little bonus for sure was ... the Fed going out of its way to say rates are going to stay as low as possible for as long as possible."
The Fed on Wednesday announced it would taper its bond-buying program but restated its belief that current high inflation is "expected to be transitory" and signaled it would stay patient before raising interest rates.
"Hints of inflation and hints of a low interest rate environment are great for Canadian cyclicals," Skipp said.
Economically sensitive consumer discretionary shares rose 1.6%, led by gains for children's entertainment company Spin Master Corp and apparel maker Gildan Activewear Inc after both reported results that beat estimates.
Energy shares rebounded after two days of losses, advancing 0.9% despite volatility in crude oil prices. U.S. crude oil futures settled 2.5% lower at $78.81 a barrel.
Meanwhile, Canada's financial regulator said that the country's banks and insurers can resume dividend increases, share buybacks and increase executive compensation, lifting a moratorium it has imposed on them since March 2020.
Still, financials ended 0.2% lower, weighed by declines for Manulife Financial Corp and Sun Life Financial Inc.
The senior executives at Canada's two biggest life insurers said they were bracing for more COVID-19 related uncertainties in their fastest-growing market, Asia.
(Reporting by Fergal Smith; Additional reporting by Amal S in Bengaluru; editing by Jonathan Oatis)
By Fergal Smith
