The US Federal Reserve raised the federal funds rate by 50 basis points, as expected. The update of the “dot chart” indicates monetary policy rates above 5% in 2023. The EUR/USD pair rallied near pre-meeting levels despite the Federal Reserve’s rate projections. Nevertheless, Danske Bank economists expect the pair to decline next year.
The FOMC says that the Fed Funds will exceed 5% in 2023
“We keep our terminal rate forecast at 5.00-5.25%in line with the new projections”.
“While Powell noted that the Fed looks through short-term volatility in financial conditions, we believe that the recent easing supports the case that inflation risks are still tilted to the upside.”
“We continue to see modest near-term upside risks to USD rates, and we forecast EUR/USD to move lower in 2023as broad USD strength plays a key role in maintaining tight financial conditions.”
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
