Fed keeps rates unchanged but hints and policy easing
The Federal Reserve has kept rates unchanged at 2.50% as widely expected, with odds of a cut just 20% going into the meeting. However, the statement has highlighted increased uncertainties on the economic outlook and that they will act appropriately in order to sustain economic expansion with a strong labour market and inflation near target.
The vote was not unanimous however, as voting member Bullard opted for a cut, and the market has taken the tone of the statement as one which clearly leaves the door open for a rate cut in upcoming meetings. July is earmarked for a move, and the economic data from hereon out will confirm (or not) policy action ahead.
The reaction from the currency market has been relatively tame, though the USD has weakened a little, with USD/JPY moving down towards 108.00 again, while EUR/USD tipped the 1.1250 mark before easing off a little. Cable has tipped 1.2670 and AUD/USD took a peek over 0.6900, while USD/CAD has tested below 1.3300 with the backdrop of the earlier inflation numbers adding pressure here.
Markets turn their attention to the press conference, where Chair Powell will expand on the Fed's considerations at this meeting.