Below we present the most important remarks from interest rate decision and monetary policy statemet along with macroeconomic projections:
- Fed decided to raise interest rates to 2,25% from 2,00% in line with market expectations (unaniomous vote)
- Fed dot-chart shows that 12 of 16 bankers are in favor of four rate hikes in 2018
- Median estimate for 2019 still shows three hikes
- Fed removes reference to accommodative policy from statement
- Fed points that risks to outlook appear roughly balanced
- Fed repeats hat labor market strenghtened, economic activity is also strong
- Further gradual hikes consistent with expansion
- Long-term interest rate at 3% versus 2,9% in June
Fed delivered hike as expected and does not change much in statement and economic projections. Fed is satisfied with the economy stance and does not see many risk factors for the outlook. In that case an initial dollar selling should not be considered as surprising. It is worth to note that Fed completely removed statement about accomodative policy. This should be positive for the dollar but it can also means that in the future Fed may change its mind and return to this statement and hikes interest rates more slowly. Currently we can consider that Fed is finally neutral and we should not expect much more from the Fed.
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Dollar is under pressure after Fed decision and publication of monetary statement. Source: xStation5
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