FOMC Interest rate decision (Fed) | News & Analysis
Fed's Powell: Our two goals are a bit in tension
At the usual post-meeting press conference, Fed Chair Jerome Powell explained why policymakers decided to lower the Federal Funds Target Range (FFTR) to 3.50%–3.75% after the December meeting and took questions from reporters about the move.
Fed projects only 50 bps of additional rate cuts between 2026 and 2027; lifts GDP forecasts
The Federal Open Market Committee’s (FOMC) latest dot plot, released on Wednesday, indicates that interest rates will average 3.4% by the end of 2026, in line with the September projection.
Fed's Powell: Labour market has significant downside risks
"The end of the government shutdown informs projections of a swing to higher growth next year. Implication of Fed forecasts is higher productivity. Our two goals are a bit in tension."
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AUD/USD slides to two-week low, below 0.6600 as traders await US CPI
The AUD/USD drops to a two-week low during the Asian session on Thursday amid a weaker risk tone, which benefits the safe-haven US Dollar and weighs on the Aussie for the sixth consecutive day. Apart from this, China's economic woes further undermine the Australian Dollar, though the RBA's hawkish stance could limit losses. Furthermore, bets for more rate cuts by the Fed might cap the USD and lend support to the currency pair ahead of the US inflation figures later today.
USD/JPY climbs above 155.50 as traders await US CPI release
The USD/JPY pair rises to around 155.60 during the early Asian session on Thursday. The US Dollar edges higher against the Japanese Yen on the cautious comments from Federal Reserve Governor Christopher Waller. Traders will keep an eye on the US Consumer Price Index inflation data for November, which will be released later on Thursday.
Monetary policy: Three central banks, three decisions, the same caution
While the Fed eased its monetary policy on 10 December for the third consecutive FOMC meeting, without making any guarantees about future action, the BoE, the ECB and the BoJ are holding their respective meetings this week.
Gold flirts with weekly range hurdle; looks to US CPI for fresh impetus
Gold is seen consolidating near the top end of the weekly range, below the $4,350 level, during the Asian session on Thursday. The US Dollar preserves the overnight recovery gains and caps the bullion, though a weaker risk tone and dovish Fed bets act as a tailwind for the non-yielding yellow metal. Traders now look to the US consumer inflation figures for cues about the Fed's rate-cut path in 2026 before placing fresh directional bets around the XAU/USD pair.
Bitcoin risks deeper correction as ETF outflows mount, derivative traders stay on the sidelines
Bitcoin (BTC) remains under pressure, trading below $87,000 on Wednesday, nearing a key support level. A decisive daily close below this zone could open the door to a deeper correction.
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What's important about the Federal Reserve’s monetary policy meeting?
With a pre-set regularity, a nation's central bank holds a monetary policy meeting where board members take different measures, the most relevant one setting the range of the federal funds rate, which greatly influences the interest rate charge on loans and advances to commercial banks.
In the US, the Federal Open Market Committee (FOMC) of the Federal Reserve (Fed) meets at intervals of five to eight weeks to announce their latest decisions. An interest-rate hike increases borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors. A rate cut, on the other hand, tends to weaken the USD.
If rates remain unchanged, the attention, main news and analysis turn to the tone of the monetary policy statement and the press conference from the Fed’s Chair. Markets analyze whether the tone is hawkish or dovish over future developments of inflation.
What is the Fed?
The Federal Reserve (Fed) is the central bank of the United States (US) and it has two main targets: to maintain the unemployment rate at its lowest possible levels and to keep inflation around 2%. The Federal Reserve System's structure is composed of the presidentially appointed Board of Governors and the partially appointed Federal Open Market Committee (FOMC). The FOMC organizes eight scheduled meetings in a year to review economic and financial conditions. It also determines the appropriate stance of monetary policy and assesses the risks to its long-run goals of price stability and sustainable economic growth. The FOMC Minutes, which are released by the Board of Governors of the Federal Reserve weeks after the latest meeting, are a guide to the future US interest-rate policy.
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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 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.
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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.