FOMC Interest rate decision (FED) | News & Analysis


Powell urges more spending amid coronavirus' impact on the economy

Powell put affirmed, Fed’s Evans hawkish comments

US stocks rejoiced and snapped a four-day losing streak after the Fed Chair affirmed the ‘Powell Put’, noting that further fiscal and monetary stimulus will be needed for the economy. Treasury Secretary Mnuchin said the next stimulus needed should help travel and restaurants, also offering that the unused Fed facility money could be used for smaller businesses.

Powell's testimony

FED'S LAST EMERGENCY MEASURES REVIEW

Federal Reserve Updates Permissible Inflation: Markets find upbeat logic in the new policy

The Federal Reserve adopted a new inflation policy that that will permit price increases above the 2% target for extended periods if necessary to balance periods of weak performance. A product of the much discussed Monetary Policy Review, which has been more than a year in the making, the change reflects the bank’s experience with inflation and unemployment since the financial crisis.

Fed leaves policy rate unchanged, USD weakens modestly with initial reaction

The 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 policy statement, the Fed reiterated that it is committed to using its full range of tools to support the US economy and noted that the path of the economy will depend on the course of the coronavirus outbreak.


FED Latest News

FED Latest Analysis



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.


July Fed Decision Review


June Fed Decision Review


May Fed Decision Review

Jobless claims and PMI's after Fed warning

At yesterday's FOMC meeting minutes we saw that the Fed had been concerned about the unemployment picture. Jerome Powell has previously stated that unemployment in the US could hit 25%. The minutes from April's rate setting meeting also showed there is deep concern not just about the current state of the economy, but also what lies ahead.

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Editors' Picks

AUD/USD renews two-month lows near 0.7050

AUD/USD refreshes two-month lows near 0.7050, having stalled its bounce around 0.7075 region. The US dollar appears to have regained poise amid tepid market mood. The focus is now on whether the US dollar gives back some ground ahead of US data, Powell Day 3. 

AUD/USD News

Gold's potential short-term reprieve if USD pulls back

Gold prices have deteriorated in the US dollar's relentless comeback as investors move away from stocks. The price of the dollar is correlated to gold, so it stands to reason that if the dollar is about to tail off its gains, then gold should find reprieve.

Gold News

Euro outlook: Is 1.15 next?

Investors continued to sell euros on Wednesday, driving the currency to its weakest level since July. Europe’s greatest fear is materializing with the number of coronavirus cases exceeding 5 million. As we indicated at the start of the week, stricter restrictions are on their way.

Read more

USD/JPY: This could be the bulls's last dance in the 105, eyes on 103.50s

USD/JPY is stalling at market structure and bears and looking for opportunity to the downside. Bulls might have some upside to go yet, but the air will be getting thinner in those heights.

USD/JPY News

WTI: Oil sellers face rejection below $39.30 for third straight day

WTI fades the drop to sub-$39.30 levels for the third consecutive day. The repeated bear failure may entice buyers and yield a bounce. However, Sept. 18 high remains a level to beat for the bulls.

Oil News

Majors

Cryptocurrencies

Signatures


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