Following its 2-day meeting, the Federal Open Market Committee announced that it would hike the benchmark interest rate by 25 basis points to the target range of 2% – 2.25% in a widely expected decision. Jerome Powell, Chair of the Board of Governors of the Federal Reserve System, is scheduled to deliver his comments on the monetary policy in a press conference at 18:30 GMT.
Key highlights from the official statement (via Reuters)
- Fed removes from statement description of monetary policy as remaining accommodative.
- Sees faster economic growth this year and slightly faster growth next year in new economic projections compared with June projections.
- Sees slightly lower PCE inflation in 2019 compared with prior projections; projections for 2019 core PCE and 2019 unemployment rate unchanged.
- Fed in statement does not change description of economy; repeats that jobs gains have been strong and household spending and business fixed investment have grown strongly.
- Repeats expects further gradual increases in fed funds rate will be consistent with sustained economic expansion, strong jobs market and inflation objective.
- Repeats risks to the economy appear “Roughly balanced”.
- Sets interest rate paid on excess reserves at 2.20 percent, keeping it 5 basis points below top of fed funds target range.
- Fed vote in favor of policy was unanimous.
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About the FOMC statement
Following the Fed’s rate decision, the FOMC releases its statement regarding monetary policy. The statement may influence the volatility of USD and determine a short-term positive or negative trend. A hawkish view is considered as positive, or bullish for the USD, whereas a dovish view is considered as negative, or bearish.
About the FOMC economic projections
This report, released by Federal Reserve, includes the FOMC’s projection for inflation and economic growth over the next 2 years and, more importantly, a breakdown of individual FOMC member’s interest rate forecasts.
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