3 or 4 rate hikes in the end?

3 or 4 rate hikes in the end?

The US dollar was falling ahead of the Fed’s statement and could not strengthen even after. Let’s look why the Fed could not support the USD. 

The central bank has announced an interest rate, and, as expected, it was raised by 25bp. The Fed based its decision on the strengthening economy. The line that the "economic outlook has strengthened in recent months" was added to the statement.

Key points of the Statement:

  • Although inflation is still below the Fed’s target of 2%, it showed a positive dynamics. So it is expected to move up in coming months (in the last statement Mr. Powell talked about the year, not months);
  • Job gains were strong and unemployment was low;
  • Near-term risks to the economic outlook are roughly balanced, however, the Fed will look at the inflation development closely; 
  • However, despite positive assessments of the economy, the committee’s forecast for the long-run sustainable growth rate of the economy was unchanged at 1.8 percent;
  • The Chairman said that the stance of the monetary policy remains accommodative; 
  • Trade wars were not considered in the outlook.

And what about future rate hikes?

According to economic projections, Fed officials are split on whether two or three additional interest rate increases will be needed this year. So Mr. Powell said their future policy will highly depend on the economic data. Too fast rate hikes can negatively affect the inflation.

Although rate hikes are supposed to support a domestic currency, the greenback was weak ahead and during the Fed’s statement. First of all, an unstable environment in the White House, a possibility of trade wars, and NAFTA negotiations are highly affecting the USD now. Secondly, the rate hike was so predictable, that investors did not react to it a lot. More likely, that one rate hike will not be able to support the US dollar in the long-term. 

Снимок экрана 2018-03-21 в 22.01.37.png

Similar

Gold Rises as Central Banks Buy More
Gold Rises as Central Banks Buy More

About 24% of global central banks intend to increase gold reserves in 2023. Rising inflation, geopolitical turmoil, and worries about interest rates are reasons to increase gold reserves.

US Evades Default This Time
US Evades Default This Time

Greetings to a brand new week full of events, economic releases and US debt frictions. We are here to tell you everything you need to know!

USD Gains Momentum
USD Gains Momentum

The US dollar index breaks one resistance after another. Read the report to learn the next target for the US dollar index!

Latest news

No More US Debts in Sight
No More US Debts in Sight

The first day of June should’ve brought us the US default. Unsurprisingly, the US House passes the debt ceiling bill at the latest possible moment.

Deposit with your local payment systems

Feel the Team Spirit

Data collection notice

FBS maintains a record of your data to run this website. By pressing the “Accept” button, you agree to our Privacy policy.

Callback

A manager will call you shortly.

Change number

Your request is accepted.

A manager will call you shortly.

Next callback request for this phone number
will be available in

If you have an urgent issue please contact us via
Live chat

Internal error. Please try again later

Don’t waste your time – keep track of how NFP affects the US dollar and profit!

Beginner Forex book

Beginner Forex book will guide you through the world of trading.

Beginner Forex book

The most important things to start trading
Enter your e-mail, and we will send you a free Beginner Forex book

Thank you!

We've emailed a special link to your e-mail.
Click the link to confirm your address and get Beginner Forex book for free.

You are using an older version of your browser.

Update it to the latest version or try another one for a safer, more comfortable and productive trading experience.

Safari Chrome Firefox Opera