The Federal Reserve raised rates as broadly expected.
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The Fed removed the word “accommodative policy” from its statement, indicating that the interest rate nears neutral. This is a dovish move.
Developing story
The Fed was also projected to continue signaling another rate increase in December, making it the fourth hike in 2018. Markets were uncertain about future Fed policy as the central bank’s interest rate already matches inflation, thus making it not accommodative anymore. Some Fed officials suggested applying tight monetary policy.
The Fed’s dot plot provides some answers and so does the FOMC statement. Special attention was also dedicated to the word “accommodative”.
GDP growth was quite robust and wage growth has recently accelerated. On the other hand, the recent inflation report showed core inflation slipping from the highs.
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