The Federal Reserve's dot-plot implies no more hikes this year, with one hike in 2020. Nine members changed their opinions.
There were significant downward revisions to the economic outlook. The statement is quite dovish as well. They say the unemployment rate is done falling. Inflation will be lower according to the Fed. In addition, the Fed will stop shrinking the balance sheet at the end of the year. They will decrease the reduction in September.
This is a very dovish statement.
The US Dollar is falling sharply on the news from the Fed. EUR/USD is trading close to 1.1400, GBP/USD tops 1.3200, and USD/JPY is around 111.25.
Here is the move on the EUR/USD chart:
The Fed was expected to leave its policy unchanged and to provide further details on its plans regarding interest rates. After raising interest rates in December, the Fed has signaled a patient approach to the next moves. Markets closely watch the forecasts for interest rates.
Fed Chair Jerome Powell recently said that the US economy is in a good place while noting headwinds from abroad.
Markets are also eyeing further details about the balance sheet reduction program, also known as Quantitative Tightening.
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