In the much awaited United States Federal Reserve meeting which happened last week, the Fed hiked the interest rates by +25 basis points to a range between 1 and 1.25 percent and kept the interest rate forecasts unchanged. Fed’s monetary policy announcement remained positive over the chances of additional rate hikes for this year. In response to this statement, Fed’s members reacted to the interest rate hikes this week.

Dallas Federal Reserve Bank President, Robert Kaplan remained uncertain over the short-term interest rates. Kaplan stated that he would wait for additional data to understand whether the inflation numbers will remain permanent or not. Chicago Federal Reserve President, Charles Evans said that the Fed should wait till the end of this year before planning another rate hike. He also supported the current policy of interest-rate hikes with a slow reduction of the balance sheet.

However, New York’s Fed President Dudley, one of the most influential members of the Fed, stated that the Fed should continue to hike the interest rates in this year. Dudley said that tightening the labor market would bring back the inflation targets of 2 percent. Due to this, the dollar began to strengthen in the markets. From a trading standpoint, we expect the dollar to rise in the days to come.

The information and views expressed herein are NoaFX’s opinion about the market and no responsibility (or liability) is accepted for any factual errors or trading decisions made by traders based on this opinion. The contributor might be involved in trading or hold some positions in the market and accepts no liability arising out of the above information.

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