Breaking: Fed hikes policy rate by 25 bps to 5-5.25% as expected

The US Federal Reserve (Fed) announced on Wednesday that it raised the policy rate, federal funds rate, by 25 basis points to the range of 5-5.25% following the May policy meeting. This decision came in line with the market expectation.

As anticipated, the Fed increased its policy rate by 25 basis points (bps) in May, bringing it to a range of 5–5.25%. However, the US central bank removed language indicating that it “anticipates that some additional policy firming may be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2% over time.” The USD selloff gained momentum in the latter hours of the American session as a result of the initial response to this dovish tone.