Categories Finance

Federal Reserve rate decision: Rates held unchanged, as expected

  • Prior range was 4.25-4.50%
  • No change to rates was 99% priced in
  • Removes line in the statement that said ‘risks to the outlook roughly in balance’
  • Labor market conditions remain solid
  • Inflation remains somewhat elevated
  • GDP forecast this year to 1.7% from 2.1%
  • Beginning in April, the Committee will slow the pace of decline of its
    securities holdings by reducing the monthly redemption cap on Treasury
    securities from $25 billion to $5 billion (Waller dissented to this)
  • The Committee will maintain the monthly redemption cap on agency debt and agency mortgage-backed securities at $35 billion.

Reversing a big portion of the QT may be seen as dovish.

Prior to the decision, the market is pricing in 55 basis points of Fed easing this year. USD/JPY was trading at 149.92 ahead of the data.

This article was written by Adam Button at www.forexlive.com.

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