The market sentiment switched to risk-off after the Fed’s Powell statement. The USD edged higher, while risker assets started falling after reaching quite high levels. Let’s have a closer look.
Fed leaves rates intact
On Thursday, the Fed made up its mind to leave interest rates on hold. The major bank told that everlasting firm job gains as well as household spending had kept the American economy on track.
The US labor market has kept strengthening, while economic activity has been soaring at a firm rate, as the key US financial institution revealed in its latest policy statement, leaving its plans to proceed with gradual lifts on hold.
The statement actually reflected a minor tweak in the American major bank’s outlook for the US economy since the last policy gathering in September. Inflation is still keeping to its 2% objective. As for unemployment, it keeps diving. However, risks to the economic outlook seem to be well balanced.
However, policymakers stressed that business investment had decelerated from its rapid tempo earlier this year, which is a probable drag on future economic surge.
Financial markets had expected the key US financial institution to hold its benchmark overnight lending rate intact in the current band 2%-2.25%.
In 2018, the major US bank has lifted rates three times. It’s generally anticipated to proceed with it in December.
Data published in late October disclosed that in the third quarter the American economy rallied at a 3.5% annual rate, which is quite above the 2% annual surge tempo the key US bank as well as numerous financial experts consider to be the underlying trend.
However, Fed policymakers have also started discussing whether the American economy has reached a plateau because the stimulus from the current presidential administration's $1.5 trillion tax cut package as well as increased federal spending started fading.
The major bank’s policy statement didn’t take stock of recent volatility in American stock markets, which provoked a selloff in October, or address the likelihood of a deceleration in global surge next year.
The overall market sentiment is mixed as investors await the Federal Reserve’s statement today at the evening.
The Federal Open Market Committee will make its statement and announce the interest rate on July 29, at 21:00 MT time.
The market sentiment improved after the USA reported some decreasing in coronavirus hospitalizations. Gold dropped below $2 000 and the US dollar dipped down, while stocks surged. Let’s have a closer look.
The RBNZ will make the monetary policy statement on August 12 at 5:00 MT time!
The market has started the week with a mixed sentiment…