Fed Holds Rates Steady, Dollar Slips
London: 21 March 2024 (TraderMade): The US Federal Reserve kept interest rates steady (at 5.25-5.5%) during their latest meeting, defying some market expectations for a more hawkish stance. The decision to hold rates, coupled with the Fed's maintained forecast for three rate cuts this year, sent the US dollar tumbling.
Fed Maintains Interest Rates, Pledges Gradual Inflation Reduction
Despite recent strong inflation reports, Fed Chair Jerome Powell downplayed their significance, reiterating the central bank's commitment to gradually lowering inflation. This reassurance from the Fed led markets to increase their bets on an easing cycle beginning in June.
Dollar Tumbles on Easing Bets
The dollar's decline was broad-based, with major currencies like the Euro, Sterling, and Aussie Dollar all registering gains. The Aussie surged particularly high following positive Australian jobs data released on Thursday.
Analysts: Fed Prioritizes "Soft Landing" for Economy
Analysts suggest the Fed may need a strong justification to deviate from its current path of rate cuts. The central bank prioritizes a "soft landing" for the economy, aiming for continued growth alongside lower inflation and unemployment.
Focus Shifts to Bank of England Decision
With the Fed meeting out of the way, markets now shift their focus to the Bank of England's policy decision later today, where rates are expected to remain unchanged.
