The Fed announced a rate hike by 25 basis points yesterday, with rates in a range of 0.75% to 1%, in line with market expectations. The Fed Chair Yellen stated that It is appropriate to gradually remove accommodation, as the US economy is going well. Gradual rate hikes will be appropriate over the next few years, to sustain the economic expansion. Comparing to the economic projection made in December, the medium economic projection is essentially unchanged. The medium projection for the federal funds rate is 1.4% to the end of 2017, 2.1% to the end of 2018, and 3% to the end of 2019. That is to say, we can expect two more rate hikes from the Fed by the end of this year, a rate hike in June or July is very likely. The medium projection for GDP growth is 2.1% in 2017 and 2018, and down to 1.9% in 2019. The medium projection for unemployment rate is 4.5% in Q4 and over the next two years. The medium projection for PCE is 1.9% this year and expects to rise to 2.0% in 2018 and 2019. Yellen commented that the economy continues to expand at a moderate pace, labour market has seen continuous improvements. The unemployment rate was 4.7 percent in February near its recent low. Solid income gains have supported household spending growth. The Fed expects job condition will strengthen further. Business investment has firmed, business sentiment is at a favorable level. The personal consumption expenditure rose to nearly 2% in January, largely driven by energy prices. The Fed expects core inflation to move up and overall inflation to stabilize around 2% over the next few years. The Fed expects the economy to expand at a moderate pace over the next few years. Nevertheless, the dollar plunged after the release of the rate decision due to profit-taking pressure, as markets have largely priced in since February. The fall of the dollar pushed other major currencies up. Spot gold surged from the significant support level at 1200, touching a 1-and-a-half week high of 1228.76. EUR/USD surged more than 120 points, hitting a 5-week high of 1.0745. GBP/USD surged more than 110 points, hitting a 2-week high of 1.2308. Be aware of another profit-taking pressure and retracements post these substantial surges. Earlier today during the early Asian session, the Bank of Japan announced that the monetary policies remain steady, which was in line with expectations. The rates remain unchanged at -0.1%, 10-yr bond yields keep at a level near zero, asset purchases will remain at about 80 trillion yen a year. The BoJ stated that Japan’s economy has continued its moderate recovery. However, the BoJ didn’t give hints on any future rate hikes, the rates will likely remain at the current level for an extended period, as it hasn’t seen a sustainable pickup in inflation. This morning, the Swiss National Bank announced that interest rates remain steady at -0.75%. The Bank of England will announce rate decisions and monetary policies … Source: FX PRO News
The Fed announced a rate hike by 25 basis points yesterday, with rates in a range of 0.75% to 1%, in line with market expectations. The Fed Chair Yellen stated that It is appropriate to gradually remove accommodation, as the US economy is going well. Gradual rate hikes will be appropriate over the next few years, to sustain the economic expansion. Comparing to the economic projection made in December, the medium economic projection is essentially unchanged. The medium projection for the federal funds rate is 1.4% to the end of 2017, 2.1% to the end of 2018, and 3% to the end of 2019. That is to say, we can expect two more rate hikes from the Fed by the end of this year, a rate hike in June or July is very likely. The medium projection for GDP growth is 2.1% in 2017 and 2018, and down to 1.9% in 2019. The medium projection for unemployment rate is 4.5% in Q4 and over the next two years. The medium projection for PCE is 1.9% this year and expects to rise to 2.0% in 2018 and 2019. Yellen commented that the economy continues to expand at a moderate pace, labour market has seen continuous improvements. The unemployment rate was 4.7 percent in February near its recent low. Solid income gains have supported household spending growth. The Fed expects job condition will strengthen further. Business investment has firmed, business sentiment is at a favorable level. The personal consumption expenditure rose to nearly 2% in January, largely driven by energy prices. The Fed expects core inflation to move up and overall inflation to stabilize around 2% over the next few years. The Fed expects the economy to expand at a moderate pace over the next few years. Nevertheless, the dollar plunged after the release of the rate decision due to profit-taking pressure, as markets have largely priced in since February. The fall of the dollar pushed other major currencies up. Spot gold surged from the significant support level at 1200, touching a 1-and-a-half week high of 1228.76. EUR/USD surged more than 120 points, hitting a 5-week high of 1.0745. GBP/USD surged more than 110 points, hitting a 2-week high of 1.2308. Be aware of another profit-taking pressure and retracements post these substantial surges. Earlier today during the early Asian session, the Bank of Japan announced that the monetary policies remain steady, which was in line with expectations. The rates remain unchanged at -0.1%, 10-yr bond yields keep at a level near zero, asset purchases will remain at about 80 trillion yen a year. The BoJ stated that Japan’s economy has continued its moderate recovery. However, the BoJ didn’t give hints on any future rate hikes, the rates will likely remain at the current level for an extended period, as it hasn’t seen a sustainable pickup in inflation. This morning, the Swiss National Bank announced that interest rates remain steady at -0.75%. The Bank of England will announce rate decisions and monetary policies …
Source: FX PRO News
Related Posts: