by Gertrude Chavez-Dreyfus
NEW YORK, June 14 (Reuters) – The US Federal Reserve (Fed) kept interest rates on hold as expected, but the US dollar fell Wednesday on suggestions that borrowing costs could rise another 50 basis points (bps) by the end of December.
The dollar index fell 0.3% to 103.01 last time. = USD After hitting a four-week low of 102.66 during the session.
The euro narrowed its gains and closed at $1.0827. Euro = EBS, rose 0.3%. The dollar fell 0.2% against the Japanese yen to 139.905 yen. JPY=EBS.
The Federal Open Market Committee (FOMC), which sets interest rates, said in a unanimous policy statement issued at the end of its last two days of meetings that it would “maintain its target (interest rate) range.” stable This meeting will allow the Commission to assess additional information and implications for monetary policy. ”
Fed Chairman Jerome Powell hinted at further rate hikes, but said at a press conference that the central bank had hit its target for benchmark federal funds rates.
Forecasts from the US central bank indicated that most policymakers believe monetary policy needs to be tightened further.
Officials now expect the Federal Funds rate to be: Top 5.6% That suggests two more rate hikes of 25bps in 2023, up from the previous forecast of 5.1% announced in March.
“Inflation is moving in the right direction, but it’s moving slowly and the Fed is still frustrated by its inability to move the unemployment needle,” Chris Lowe, chief economist at FHN Financial in New York, said in an email. ,” he said in an email. comment.
“The biggest surprise in the statement and in the SEP[Summary of Economic Outlook]is not the willingness to pause or resume rate hikes, but how much the Fed wants to raise rates,” he said.
Low, citing St. Louis Fed President James Bullard’s comments last month, said at least: Another 50 basis points increase.
“James Bullard was thought to be the most hawkish a few weeks ago…in the end, he turned out to be loyal to the consensus.”
Trader added to betwhich is now over 70%, After holding off a rate hike in June, the Fed plans to raise rates again next month. fed watch
“Compared to the last time the rate was 5.25%, rates are likely to stay at this level for some time,” Srijan Katyar, global head of strategy and trading services at international brokerage firm ADSS, said in an email. .
He noted that the federal funds rate stood at 5.25% from July 2006 to August 2007 before it was cut in response to the global financial crisis.
The Fed’s decision was confirmed by Wednesday’s report. US Producer Prices Producer inflation fell more than expected in May, marking the lowest annual increase in producer inflation in nearly two and a half years.
The US consumer price index rose 0.1% last month after rising 0.4% in April, according to data released on Tuesday. CPI rose 4.0% in the 12 months to May, the lowest year-on-year rate of increase since March 2021.
The European Central Bank’s next interest rate decision is due on Thursday and the market is pricing in a 25 basis point rate hike and another rate hike in July before a pause later in the year.
The Bank of Japan is set to announce its monetary policy decision on Friday and is expected to maintain its ultra-dovish stance and yield curve control setting.
Sterling Elsewhere GBP=D3 Against the dollar, it climbed 0.4% to $1.2660 after reaching $1.2699, its highest since April 2022. Surprisingly strong wage growth data released on Tuesday raised the chances of the Bank of England raising by half a percentage point at next week’s meeting to 20%.
Currency bid price at 3:53 PM (1953 GMT)
explanation
Rick
last
US ends previous session
Rate of change
YTD percent change
high bid
low bid
dollar index
= USD
103.0100
103.3000
-0.27%
-0.464%
+103.4000
+102.6600
euro/dollar
Euro = EBS
$1.0827
$1.0793
+0.32%
+1.05%
+$1.0865
+$1.0774
dollar/yen
JPY=EBS
139.8600
140.2400
-0.27%
+6.68%
+140.2600
+139.2900
euro/yen
Euro Yen =
151.42
151.33
+0.06%
+7.93%
+151.5400
+150.9300
dollar/switzerland
CHF=EBS
0.9012
0.9053
-0.41%
-2.50%
+0.9060
+0.8966
sterling/dollar
GBP=D3
$1.2662
$1.2612
+0.40%
+4.71%
+$1.2699
+$1.2601
dollar/canada
CAD=D3
1.3332
1.3317
+0.11%
-1.61%
+1.3352
+1.3272
Australia/Dollar
Australian dollar = D3
$0.6793
$0.6768
+0.37%
-0.34%
+$0.6835
+$0.6756
Euro/Switzerland
euro franc =
0.9756
0.9768
-0.12%
-1.38%
+0.9772
+0.9731
euro/pound
EURGBP=
0.8549
0.8556
-0.08%
-3.34%
+0.8561
+0.8542
New Zealand Dollar/Dollar
NZD=D3
$0.6211
$0.6150
+0.99%
-2.19%
+$0.6236
+$0.6144
dollar/norway
NOK=D3
10.6440
10.6490
-0.08%
+8.42%
+10.7290
+10.5280
Euro/Norway
Euroknock =
11.5296
11.4811
+0.42%
+9.87%
+11.6090
+11.4201
dollar/sweden
SEK=
10.7259
10.6783
+0.83%
+3.06%
+10.7905
+10.6463
Euro/Sweden
EURSEK=
11.6094
11.5137
+0.83%
+4.12%
+11.6188
+11.5006
(Reporting by Gertrude Chavez-Dreyfuss; Additional reporting by Amanda Cooper, London; Editing by Jonathan Oatis, Lisa Shumaker, Richard Chang)
((gertrude.chavez@thomsonreuters.com; 646-301-4124; Reuters messaging: gertrude.chavez.reuters.com@reuters.net/))
The views and opinions expressed herein are those of the authors and do not necessarily reflect those of Nasdaq, Inc.
