In its first meeting in 2023, the US Federal Reserve decided to raise interest rates by 25 basis points, to reach 4.75%, as was expected in the market.
The interest statement issued by the bank stated that inflation rates have declined to some extent, but are still high, and that the Fed is keen to return inflation levels towards the bank’s target of 2% in the long term, and the committee expects that continuous increases in interest rates will be appropriate to reach the goal.
In the press conference that followed the statement, Federal Reserve Chairman Jeremy Powell indicated that the labor market is still strong despite the slowdown in growth, and that the recent inflation data is welcome, but it is still higher than the bank’s target, and that raising interest by 25 basis points will enhance the decline in inflation in the coming period and there will be increases Others in the next bank meetings.
Powell confirmed that by the end of last year, the final interest expectations ranged between 5-5.50%, but in light of the current conditions, it is expected that these expectations will be modified in the quarterly forecast, which will be issued in March, which will depend mainly on economic figures.
So, as we mentioned in the previous report yesterday, Wednesday, that the markets calculated the interest rate hike by 25 basis points, and that the initial reaction will be a rise in the US dollar, and the next movement depends on the markets’ reading of Jerome Powell’s speech, as the markets took from his statements signs that the US Federal Reserve is about to stop tightening monetary policy, but rather And it went further by raising expectations of a reduction in interest rates before the end of the year.
Forecasts of futures contracts by the FEDWatch tool from CME are now seeing a peak in inflation rates of just under 4.9% by June, compared to more than 5% before the meeting, while you see a cut in interest rates in the fourth and last quarter of the current year, and this put pressure on the dollar’s movements during and after the conference. Journalist Jerome Powell.
The general index of the US dollar rose in the initial reaction by 0.35% and tested 101.90 levels before it fell and lost more than 1% from its highest levels and concluded the session at 101.02 levels and is now trading down by 0.30% at 100.70 levels, its lowest level since April of the year Past .
The euro rose against the US dollar by more than 130 points and closed the session at the highest levels in 10 months and is now trading at 1.1020 levels, while the Japanese yen rose by more than 100 points and is now trading at 128.55 levels.
The yellow metal recorded gains of more than 2.5%, as it traded at $1953 an ounce, its highest level since last April, after the yield on US Treasury bonds for 10 years declined by more than 4% at 3.4000.
The US indices recorded collective gains when they closed the trading session on Wednesday, as the Nasdaq rose by more than 2%, while the S&P 500 index recorded gains of about 1%.
01/11/2024
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