The Federal Reserve is not that worried about slower growth, seeing it as transitory. That is the main takeaway from the Fed decision. They did acknowledge the lower inflation and look at the average of employment rather than the latest NFP. Do they expect a solid jobs report this Friday?
While they did not provide any hint about the June decision, the lack of real worries was received positively by the dollar. It came slowly and gradually, just like the Fed decisions.
- EUR/USD slips under 1.09
- GBP/USD dips below 1.29
- USD/JPY is reaching a new 6-week high at 112.65
- USD/CAD is backing off from the highs and trades at 1.37
- And AUD/USD is diving to lower lows at 0.7440.
Here is the key phrase that consists of the word “transitory”:
The Committee views the slowing in growth during the first quarter as likely to be transitory
And more from the statement that acknowledges lower inflation:
Excluding energy and food, consumer prices declined in March and inflation continued to run somewhat below 2 percent
Fed Background
The Federal Reserve was expected to leave the interest rate unchanged at a range of 75-100 basis points. The big question is about the June decision. Will they raise rates then or take a longer pause? See Fed preview: reasons to be worried – 3 scenarios
The US dollar was stable ahead of the publication with the exception of the Australian dollar that was falling.
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