FOMC Interest rate decision (FED) | News & Analysis


Powell speech: We may need more fiscal support

FOMC Chairman Jerome Powell reiterated on Tuesday that the Federal Reserves remains committed to using all of its tools to support the economy through the coronavirus crisis. "We will continue to provide strong support," Powell told the US Senate Banking Committee and noted that it is likely they will need more fiscal support. "Inequality is an important problem in our economy, it holds our economy back," Powell added.

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FED'S LAST EMERGENCY MEASURES REVIEW

Fed's Evans says Fed won't follow strict formula for timing liftoff

Chicago Federal Reserve President Charles Evans explained that the US central bank will likely need to keep monetary policy easy for some time after 2023 in order to meet its inflation goal, even once it begins raising interest rates. Evans repeated has repeated the view that the economy, while improving, remains weak. His forecast for the economy to end the year about 3.5% smaller than it was last year, and to grow at about a 4% pace next year, depends on getting further fiscal stimulus.

Powell speech: Fed is not focused on the price of assets

Jerome Powell, Chairman of the Federal Reserve System, is responding to questions at the National Association for Business Economics' 62nd Annual Meeting. Key quotes: "Global central bank coordination is essential, ongoing." "Monetary policy is not the first round of defense on financial instability."


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November Fed Decision Review

Fed Analysis: Powell adds fuel to the market fire by defending QE, rally set to extend

The Fed has left its rates unchanged as expected, making minor changes to the accompanying statement. At first, it seemed that the world's most powerful central bank was succeeding in not rocking the boat, striking a balance between expressing content about the recovery so far but airing concern about the risks of the virus. However, when Federal Reserve Chairman Jerome Powell began speaking, he gave the market reasons to tune in. He began by saying that the pace of the recovery has moderated. That served as a hint that the Fed is ready to act.


October Fed Decision Review


September Fed Decision Review

Fed Quick Analysis: No news is good news for the dollar, at least until Congress moves

Read my dot-plot, no new rate hikes – that is the message from the Fed. The new projections are pointing to low chances of higher borrowing costs in 2023, certainly not beforehand. That is merely a repeat of the previous messages by the Fed, as published in June. The accompanying statement has undergone a change, committing to an average inflation target – yet that is also unsurprising given the dovish policy shift that Powell delivered in late August.

Breaking: Fed sees economy shrinking at a softer pace in 2020 than previously forecasted

The Federal Open Market Committee (FOMC) on Wednesday announced that it left the benchmark interest rate, the target range for federal funds, unchanged at 0%-0.25% as widely expected. In its updated Economic Projections, the FOMC said it expects the gross domestic product (GDP) to contract at a softer pace than the previous forecast of 6.5% in 2020 and sees unemployment at 7.6% at year's end, compared to 9.3% in June projection.


August Fed Decision Review

Fed Quick Analysis: No news is good news for the dollar, at least until Congress moves

Read my dot-plot, no new rate hikes – that is the message from the Federal Reserve. The new projections are pointing to low chances of higher borrowing costs in 2023, certainly not beforehand. That is merely a repeat of the previous messages by the Fed, as published in June. The accompanying statement has undergone a change, committing to an average inflation target – yet that is also unsurprising given the dovish policy shift that Federal Reserve Chairman Jerome Powell delivered in late August.

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Gold risks ending 3-day winning trend

Gold's hourly chart shows a bearish divergence of RSI, confirming a three-day winning streak and erasing more than 505 of the previous week's decline from $14,869 to $1,774. However, the recovery rally could run out of steam, as the hourly chart has violated the trendline rising from recent lows.

Gold news

AUD/USD ignores weak Aussie retail sales data, trades near 0.7440

AUD/USD trades near 0.7430, representing a 0.84% weekly gain. The bearish US dollar sentiment helps the AUD/USD pair shrug off the weaker-than-expected Aussie macro data released soon before press time and consolidate near 0.7440

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Extra week of Black Friday!

Learn to trade with the best! Don't miss the most experienced traders and speakers in FXStreet Premium webinars. Also if you are a Premium member you can get real-time FXS Signals and receive daily market analysis with the best forex insights!

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USD/JPY: Bearish bias across Monthly, Weekly charts

USD/JPY trapped between daily support and resistance against bearish backdrop. Yen is under pressure across the longer-term time frames and is trending within a weekly channel to the downside.

USD/JPY News

WTI bulls ignore downbeat comments from Russia’s Novak, eye $46.00

WTI wavers near the upper end of one-week-old bullish flag. The black gold remains positive on a daily basis while taking rounds to the November month’s high, also the highest since March. Risk-on mood, US dollar weakness favor the commodities, US employment data awaited.

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Big Picture

What's important about Federal Reserve’s monetary policy meeting?

With a pre-set regularity, a nation's Central Bank has an economic policy meeting, in which board members took different measures, the most relevant one, being the interest rate that it will charge on loans and advances to commercial banks.

In the US, the Board of Governors of the Federal Reserve (FED) meets at intervals of five to eight weeks, in which they announce their latest decisions. A rate hike tends to boost the local currency, as it is understood as a sign of a healthy inflation. A rate cut, on the other hand, is seen as a sign of economic and inflationary woes and, therefore, tends to weaken the local currency.

If rates remain unchanged, attention and also main news and analysis turn to the tone of the FOMC (Federal Open Market Committee) statement, and whether the tone is hawkish, or dovish over future developments of inflation.

What is the Fed?

The Federal Reserve System (Fed) is the central banking system of the United States and it has two main targets or reasons to be: one is to keep unemployment rate to their lowest possible levels and the other one, to keep inflation around 2%. The Federal Reserve System's structure is composed of the presidentially appointed Board of Governors, partially presidentially appointed Federal Open Market Committee (FOMC). The FOMC organizes 8 meetings in a year and reviews economic and financial conditions. Also determines the appropriate stance of monetary policy and assesses the risks to its long-run goals of price stability and sustainable economic growth. FOMC Minutes are released by the Board of Governors of the Federal Reserve and are a clear guide to the future US interest rate policy.

How to trade the event?

  • Do not rely on the Fed to determine the direction of the dollar in the coming months.
  • The dollar tends to follow its predominant trend when the Fed starts to hike rates.
  • There is no direct link between the Fed hiking rates and the usd falling. When a weak usd has coincided with a Fed hiking cycle, it has been falling for some time.
  • Due to this, we may see a muted reaction to a potential Fed rate hike.

WHO IS FOMC'S CHAIRMAN?

Jerome Powell

Jerome PowellJerome Powell took office as chairman of the Board of Governors of the Federal Reserve System in February 2018, for a four-year term ending in February 2022. His term as a member of the Board of Governors will expire January 31, 2028. Born in Washington D.C., he received a bachelor’s degree in politics from Princeton University in 1975 and earned a law degree from Georgetown University in 1979. Powell served as an assistant secretary and as undersecretary of the Treasury under President George H.W. Bush. He also worked as a lawyer and investment banker in New York City. From 1997 through 2005, Powell was a partner at The Carlyle Group.



The World Interest Rates Table

The World Interest Rates Table reflects the current interest rates of the main countries around the world, set by their respective Central Banks. Rates typically reflect the health of individual economies, as in a perfect scenario, Central Banks tend to rise rates when the economy is growing and therefore instigate inflation.

FED educational resources