As expected, the Fed does not change its policy and does not start tapering. In the statement, however, we have an indication that if progress continues, tapering should begin soon (this means an announcement probably in November or December).
However, the Fed changes its macro forecasts! Here we already have a chance for a raise in 2022!
The median for the increases moves to 2022 and points to one increase. We have 10 members who are in favor of a rate hike and 10 members are in favor of keeping rates at the current level. Some, of course, want more than one raise. Inflation projections strongly increased for the current year, but barely changed for the following years. Lower economic growth for the current year and clearly increased for the next year. Source: Fed
Here we have a 50:50 split for the rate hike and for maintaining the current policy next year. Big changes also in 2023! 4 increases are expected by 2023. Only one person sees no change. We also have the first forecasts for 2024. Here, the median is 1.8%. Long-term median unchanged at 2.5%. Source: Fed
Interesting dollar reaction. The dollar is losing despite expectations of a rate hike already next year. However, the market may have been looking for tapering, and the Fed does not see the problem with inflation and for now wants to wait for further progress in the economy. Currently, a key resistance in the form of a downtrend line is being tested. Source: xStation5
The content of this report has been created by X-Trade Brokers Dom Maklerski S.A., with its registered office in Warsaw, at Ogrodowa 58, 00-876 Warsaw, Poland, (KRS number 0000217580) and supervised by Polish Supervision Authority ( No. DDM-M-4021-57-1/2005). This material is a marketing communication within the meaning of Art. 24 (3) of Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU (MiFID II). Marketing communication is not an investment recommendation or information recommending or suggesting an investment strategy within the meaning of Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (market abuse regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC and Commission Delegated Regulation (EU) 2016/958 of 9 March 2016 supplementing Regulation (EU) No 596/2014 of the European Parliament and of the Council with regard to regulatory technical standards for the technical arrangements for objective presentation of investment recommendations or other information recommending or suggesting an investment strategy and for disclosure of particular interests or indications of conflicts of interest or any other advice, including in the area of investment advisory, within the meaning of the Trading in Financial Instruments Act of 29 July 2005 (i.e. Journal of Laws 2019, item 875, as amended). The marketing communication is prepared with the highest diligence, objectivity, presents the facts known to the author on the date of preparation and is devoid of any evaluation elements. The marketing communication is prepared without considering the client’s needs, his individual financial situation and does not present any investment strategy in any way. The marketing communication does not constitute an offer of sale, offering, subscription, invitation to purchase, advertisement or promotion of any financial instruments. X-Trade Brokers Dom Maklerski S.A. is not liable for any client’s actions or omissions, in particular for the acquisition or disposal of financial instruments, undertaken on the basis of the information contained in this marketing communication. In the event that the marketing communication contains any information about any results regarding the financial instruments indicated therein, these do not constitute any guarantee or forecast regarding the future results.