- Fed holds rates stable, Powell indicates patience and dependence on data.
- Markets do not get rid of cutting rates as preemptive easing feed tones.
- The AUD/USD dropped dramatically to 0.6430 after Powell Dashes Dovish Dashes.
Australia's dollar collapsed against the US dollar following the press conference of the Fed Chair Jerome Powell, where he emphasized uncertainty around the outlook rate and ruled out preemptive easing. While the Fed maintains interest rates that do not change 4.5% as expected, Powell's comments have highlight the need for more data and re -proved the fed patient's stance. He admitted that he had no confidence to determine the appropriate rate path and said the conditions had not yet supported cutting rates.
The AUD/USD pair, hovering near 0.6545 post-statement, fell sharply to 0.6430 while entrepreneurs scaled back bets and mentioned the Fed path. Powell's statements stopped the previous slide on the dollar and triggered a changeable strength, especially against currencies that were dangerous to Aussie.
Fed faqs
The US financial policy is shaped by the Federal Reserve (FED). The Fed has two mandates: to achieve price stability and promote full work. Its main tool to achieve these goals is by organizing interest rates. When prices rise rapidly and inflation is above the Fed's 2% target, it increases interest rates, increasing borrowing costs throughout the economy. This results in a stronger US dollar (USD) because it makes the US more attractive for international investors to park their money. When inflation falls below 2% or the unemployment rate is too high, the Fed may lower interest rates to encourage borrowing, with a greenback weight.
The Federal Reserve (FED) holds eight policy meetings a year, in which the Federal Open Market Committee (FOMC) assesses economic conditions and makes financial policy decisions. The FOMC was attended by twelve Fed officials-the seven members of the Board of Managers, the President of the Federal Reserve Bank of New York, and four of the remaining eleven regional reserve bank presidents, which served a one-year term on a spinning basis.
In extreme situations, the Federal Reserve can make a policy named EASING (QE). QE is the process by which the Fed greatly increases the flow of credit to a stuck financial system. This is a policy proposal that is not standard used during crises or when inflation is very low. This was the weapon of fed selection during the great financial crisis in 2008. It involves printing the Fed more dollars and using them to buy high -grade high -grade bonds from financial institutions. QE usually weakens the US dollar.
The quantity of tightening (QT) is the Reverse process of QE, where the Federal Reserve stops buying bonds from financial institutions and does not re -consist of the bonds from its bonds, to buy new bonds. This is usually positive for the US dollar value.
