US dollar continues to benefit from the Fed’s decision, Powell’s comments

The US dollar continues to rise since the beginning of daily trading on Thursday, benefiting from the Fed’s statement and the statements of its Chairman, Jerome Powell, which are in favor of further raising interest rates, even for once, before the end of this year.

The dollar index, which measures the performance of the US currency against a basket of major currencies, rose to 105.36 points compared to the last daily close, which recorded 105.20 points.

The index fell to its lowest level at 105.28 points, compared to the highest level recorded at 105.363 points after sliding from earlier 105.70s on the day. The Fed kept the interest rate unchanged at the end of the current September meeting on Wednesday, which was in line with the expectations that spread in the markets over the recent period.

Thus, the central bank has raised interest rates 12 times since March 2022, bringing key rates to the highest levels in 22 years, which also came to support market expectations.

But some of the developments mentioned by the central bank in the interest statement, and the federal interest rate expectations issued by the Federal Open Market Committee, had a major role in creating an impact contrary to what the markets were accustomed to after the decision to keep the interest rate unchanged.

While the markets were appreciating the Fed’s decision, the result of the vote of the members of the Federal Open Market Committee, or what is known as the Fed’s expectations for the future path of the interest rate (dot-plot), showed that it raised the interest rate once this year and then reduced it twice in 2024 at a value less than what was expected at the meeting last June. This could bring the interest rate to 5.1%.

These official forecasts allow committee members to announce their expectations for the future course of the interest without announcing their names.

Twelve members of those participating in voting on the future path of the federal interest rate suggested that the additional hike would take place before the end of this year, while the remaining seven voted against expecting a single rate hike before the end of 2023. The result of this vote indicated that the number of voters against the potential hike in September was more than one vote. One of what was at the meeting last June.

The results also indicated an increase in interest expectations for the year 2025, with the average of these expectations being 3.9%, compared to 3.4% indicated by expectations last June.

Jerome Powell, Chairman of the Fed Board of Governors, said in the press conference held after the announcement of the rate stabilization last Wednesday that inflation is still very far from the central bank’s target, and we must be aware that we have a long way to go until we achieve the inflation target set at 2.” 00%. But the long-term outlook for inflation looks fairly stable.

He stressed that the Fed is strongly committed to achieving the inflation target of 2.00%, stressing that “the current position of the current monetary policy is so tight that it places severe pressure on economic activity, employment, and inflation.

Policymakers are committed to pursuing a monetary policy that is sufficiently tight to help reduce inflation rates and to continue to do so until it is possible to return inflation to 2.00% according Powell.