The Federal Reserve has cut interest rates by 25 basis points as expected. The US Dollar is chopping around, gaining some ground.
The Fed decided to act amid muted inflation pressures and global developments.
The bank dropped the phrase "act as appropriate." – a hawkish hint
Two members dissented – Esther George and Eric Rosengren, who preferred leaving rates unchanged. The bank states that uncertainties remain and it will "assess the appropriate path."
Economic activity is seen as rising at a moderate pace and the Fed is also content with employment developments. They add that household spending "appears to have picked up."
EUR/USD reaction to the Federal Reserve
The Federal Reserve was expected to cut interest rates for the third time in a row and the all within a span of three months. Jerome Powell, Chairman of the Federal Reserve, described that first July reduction as a "mid-cycle adjustment" – playing down its importance. However, further moves that came amid concerns about the global economy already looked more worrying.
Today's fresh Gross Domestic report for the third quarter has shown a marginal disappointment with 1.9% annualized growth in the third quarter. The Fed is incorporating all data.
- FOMC Preview: Three and done
- Fed Cheat Sheet: Three scenarios for EUR/USD price action as uncertainty is higher than usual
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