19:00 GMT, United States, Interest Rate Decision
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Actual 3.75%
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Forecast 3.75%
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Previous 3.75%
The FOMC decided to keep US interest rates within the 3.50-3.75% range. The decision was in line with a broad market consensus, accounting for a firm comeback of a "wait-and-see" approach in the Fed, as geopolitical risk regarding Middle East and resulting developments in the prices of energy commodities add high level of uncertianty to the economic outlook. The decision draw the highest number of dissents since October 1992.
The main insights from FOMC's monetary policy statement include:
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Economic Activity and Labor: Economic activity is expanding at a solid pace, although job gains have remained low on average while the unemployment rate remains largely unchanged.
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Inflation and Geopolitical Risks: Inflation remains elevated, driven partly by rising global energy prices. Geopolitical developments in the Middle East are currently contributing to high levels of economic uncertainty.
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Interest Rate Decision: The Committee decided to maintain the federal funds rate at 3.5%–3.75%. Future adjustments will depend on a careful assessment of incoming data, the evolving outlook, and the balance of risks.
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Mandate Commitment: The Fed remains strongly committed to achieving maximum employment and returning inflation to its 2% objective. It is prepared to adjust policy if emerging risks impede these goals.
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Dissenting Votes: While the majority supported the hold, Miran voted for a rate cut and three others (Hammack, Kashkari and Logan) opposed including an "easing bias" in the statement at this time.
Market reaction:
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US 2-year Treasury yields jumped 10 basis points, further supporting the dollar.
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USDIDX extended gains from 0.15% to 0.22%.
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Swap and Futures markets are now pricing around 10% chance of a rate hike by the end of 2026 and 30% of a rate hike by March 2027.
EURUSD (H1)
The most frequently traded currency pair extended losses from today's trading as the hawkish baricade of an easing bias in the monetary policy statement signals a firm stance of a substantial part of FOMC agains any rate cut optimism, as Powell's mandate concludes. EURUSD is currently testing the support around 1.167, which will be crucial to break out of the consolidation around EMA30 on H1 interval. Powell's conference should carry a limited weight, but the lack of overly hawkish comments should support mean reversion and a recovery above 1.1700.
Source: xStation5
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