US Dollar Rises As FOMC Decision Holds Current Path

The Federal Reserve kept interest rates unchanged in its latest monetary policy decision. The benchmark rate remains at the 0.00-0.25% bound as policymakers aim to support the ongoing recovery through its asset-purchase plans and updated economic projections. The FOMC statement noted that economic activity continues to improve but has not reached pre-pandemic levels.

Guidance on the Fed’s asset purchases shows the Fed will continue with asset purchases of $120 billion per month until the dual-mandate of maximum employment and inflation rise to exceed 2% for a sustained period. Purchases on the Fed’s balance sheet will include $80 billion of Treasury securities and $40 billion of mortgage-backed securities. Some expected the Fed to announced guidance on more targeted asset purchases.

US DOLLAR, TEN YEAR TREASURY (BLUE LINE) 1-MIN CHART

US Dollar Rises as FOMC Decision Holds Current Path

Chart created with TradingView

The Fed’s updated dot plot, which gives forward rate expectations from FOMC members, shows no changes for 2021 from the current rate, and no median expectation to rise until beyond 2022. The path of the economy remains dependent on Covid according to today’s policy statement. Federal Reserve Chair Jerome Powell is expected to speak shortly to provide further clarification about today’s decision.

(Click on image to enlarge)

US Dollar Rises as FOMC Decision Holds Current Path

Source: Federal Reserve

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