The Federal Reserve maintained the fed funds rate but signaled a hawkish stance on inflation, citing a robust labor market and balanced economic risks. Market participants await Fed Chair Powell's press conference for further guidance.
The US Federal Reserve (Fed) maintained the fed funds rate at the 4.25%—4.50% range, signaling a slightly hawkish stance on inflation. Despite acknowledging that there's no significant improvement in inflation, the Fed highlighted a resilient labor market and balanced economic risks . Policymakers noted solid economic expansion and reiterated their commitment to monitoring risks while continuing balance sheet reduction at the existing pace. The decision was unanimous.
Following the announcement, U.S. Treasury yields climbed, with the 10-year note rising four and a half basis points to 4.581%. The U.S. Dollar Index (DXY) gained 0.17%, reaching a session high of 108.10. Market participants are now awaiting Fed Chair Jerome Powell's press conference at around 18:30 GMT for further directional guidance on the Fed's future monetary policy decisions. Powell's comments could shed light on the Fed's stance on inflation, economic growth, and the potential for further interest rate hikes. Meanwhile, the USD/JPY remained relatively steady during the North American session, trading at around 155.31, down 0.12%. The pair ticked higher towards the 100-hour Simple Moving Average (SMA) at 155.44. If it surpasses this level, it could pave the way for a test of the 200-hour SMA at 155.71. Further upside is anticipated, with 156.00 emerging as the next resistance. Conversely, if USD/JPY drops inside the Ichimoku Cloud (Kumo) below 155.20, a test of 155.00 is on the cards. On further weakness, the pair could challenge the January 25 daily low of 154.09.
Federal Reserve Fed Funds Rate Inflation Labor Market Economic Risks Jerome Powell
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