The Federal Reserve raised the policy rate by 25 basis points to the 4.5-4.75% range, as expected. The dollar came under strong selling pressure, but the Danske Bank economists still expect lower EUR/USDas the base case remains that the Fed raises rates to 5% in May.
Powell sees more chances of a soft landing
“The Fed raised rates by 25 basis points, as widely expected. Powell saw the likelihood of a soft landing increasing as inflation has eased without the economy slowing markedly.”
“Persistent labor shortages and the global manufacturing cycle turnaround leave little room for the Fed to turn more dovish. We continue to expect two 25 basis point hikes at the March and May meetings.”
“Markets reacted subdued, with USD selling and UST yields falling. We stand by our forecast for a EUR/USD at 1.07 three months ahead“.
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.