Jerome Powell raised the interest rate in his first decision as Fed Chair and also added a slightly more upbeat comment about the economy. However, the dot-plot did not consist of an upgrade to the amount of rate hikes in 2018. The Fed is set to hike two more times. They did upgrade the forecasts for 2019 and 2020 but the long-term rate saw only a minor move from 2.8% to 2.9%.
In the press conference, the Fed Chair was cautious. He said the most important thing is the rate hike and not the dot-plot. He also said he was surprised that wages did not further rise. About the trade, Powell said it did not impact the current decision but did voice what business contacts told Fed members: concern about trade policy. The Fed is thus thinking about trade and not only tax cuts and fiscal spending.
All in all, this was a relatively dovish hike, at least when comparing to expectations from markets. The US Dollar plunged across the board. EUR/USD jumped to 1.2345, GBP/USD surged to 1.4150, USD/JPY slipped under 106, USD/CAD fell below 1.29 and AUD/USD is up to 0.7770.
Here is the live coverage of the event, as it happened:Get the 5 most predictable currency pairs