24 March, 2018
"This decision marks another step in the ongoing process of gradually scaling back monetary policy accommodation - a process that has been under way for several years now", Powell said in opening remarks to reporters that signaled policy continuity with his predecessor, Janet Yellen. The Fed has said it expects to raise interest rates a total of three times this year, and one of the key debates on Wall Street is whether it will wind up increasing rates three times or four.
However, this time, the tone of the commentary by the US Fed Chairman remained less hawkish and hence we do not see much volatility in the exchange rate of INR against Dollars.
The improved outlook is aided by firming economic growth in rest of the world, simulative fiscal policy and overall accommodative financial conditions.
"The statement would suggest it's open season on the dollar and greenlights sellers to re-engage as the Fed failed to confirm any of the markets' hawkish suspicions", said Stephen Innes, head of Asia-Pacific trading at OANDA.
Would rising inflation in recent months argue for a faster pace of rate increases?
The dollar tumbled Wednesday while USA stocks dipped after the Federal Reserve lifted interest rates but suggested it would not speed up the pace of additional hikes in 2018. Most importantly, the Committee indicated there could be three if not four hikes this year and next and the rate at which the funds rate could top out at is also higher than previously projected. The US economy grew at an annualised rate of more than 3% during some quarters past year, while the unemployment rate is hovering at 4.1% - the lowest since 2000.
Currently, US inflation is running at 2.2% (for the year to February) which is slightly above the Fed's target of 2%.
Another nor'easter could dump more snow over ME this week
Keep checking back with Severe Weather Team 11 on wpxi.com for updated forecasts as this storm system develops and approaches. The snow's weight will likely mean more trees and power lines falling, causing outages throughout the area, Simpson said.
Normally, a hike in interest rate in the United States does not augur well for the emerging markets and commodities.
It is generally true that higher rates favor savers while lower rates favor borrowers - but the Fed does not directly control the rates consumers get on their bank accounts and mortgages.
Some analysts say a short-term economic stimulus from Congress - in the form of a $1.5 trillion tax cut and federal spending increases - could eventually push the Fed to add a fourth rate move.
Chairman Jerome Powell, picked by Trump to lead the USA central bank, said policy makers had not altered their economic outlook following the president's announcement of trade tariffs on steel and aluminum and threats of measures against Chinese goods.
A healthy job market and a steady if unspectacular economy have given the Fed the confidence to think the economy can withstand further increases within a still historically low range of borrowing rates. A sharp rise in wage growth reported in the government's January jobs report triggered fears that higher labor costs would lead to higher inflation and, ultimately, to higher interest rates.
Two-year US yields slipped to 2.304 percent from 9 1/2-year high of 2.366 percent.
Other measures of the economy, though, have been more sluggish. What's more, the Fed has routinely overpredicted the path of the economy during the recovery and now long but slow expansion.