Breaking: Fed cuts rates but signals pause – EUR/USD crashes below 1.1100
|The Federal Reserve has cut interest rates as expected but continues labeling the labor market as "remains strong", household spending has picked up,
While the Fed has also announced the immediate end of the Quantitative Tightening scheme – instead of by late September – there were two hawkish dissenters, adding to the hawkish tilt.
The Fed said it is ready to "act as appropriate" but seems uneager to move.
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The US dollar is surging on the news and EUR/USD has dropped below 1.1100. Here is how the move looks on the chart:
The Federal Reserve was expected to cut interest rates for the first time in over a decade. A 25 basis point reduction was priced in by markets. Investors were split between the view that the Fed will only slash rates once and the one suggesting that this is the first rate cut out of many.
Low inflation and trade tensions have been behind Chair Jerome Powell's signal of the upcoming monetary stimulus. However, employment, growth, and consumer confidence have been upbeat.
In the days leading to the decision, the US dollar has been gaining some ground, but the moves have been uneven.
See Fed Preview: The currencies to trade in each of these four scenarios
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