NZD/USD holds to its gains as Federal Reserve pauses, but upward revises peak rates – by christianborjon NZDUSD Currencies Majors Fed InterestRate
Powell’s remarks indicate measured rate hikes to tackle inflation.trades volatile on Wednesday after the US Federal Reserve decided to keep the Federal Funds Rates unchanged but upward revises its peak, which spurred a drop in the NZD/USD from around 0.6230 to 0.6170. Nevertheless, as Fed Chair Powell took the stance, it gave the green light to NZD buyers to re-enter fresh longs. The NZD/USD trades around the 0.6200-0.6220 range amidst a volatile session.
When asked why not hiking instead of pausing, Powell said the “question of speed on rate hikes is separate from the question of the level of rates.” He added the Fed is not that far from reaching peak rates, adding the need to adjust the pace slower. Powell stressed the FOMC is “completely unified” to curb inflation to its 2% target and discounted rate cuts in 2023, adding that “it will be appropriate to cut rates when inflation comes down.”
The Fed’s statement highlights the labor market’s robustness, pointing out that the unemployment rate remains low but stresses that inflation is elevated and warning that tight market conditions could negatively impact economic activity. Given those conditions, thekept rates unchanged, pausing its tightening cycle, but upward revised the FFR peak, as showcased by the dot plot in the Summary of Economic Projections .
The dot plot showed that most officials expect the Federal Funds Rates to peak at 5.6% by the year-s end, up from March’s 5.1%. Additionally, policymakers have adjusted their
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