The Federal Reserve Group keeps the interest rate constant while the markets are preparing for Trump’s tariff policies
- The Federal Reserve is expected to leave the policy price unchanged for the second consecutive meeting.
- The revised summary of economic expectations can provide major evidence about politics.
- The US dollar can recover if the Federal Reserve reduces growth concerns.
The Federal Reserve (United States) (United States) will announce monetary policy decisions and spread the revised summary of economic expectations (SEP), the so -called DOT plot, after a March policy meeting on Wednesday. Market participants are widely expecting that the Central Bank in the United States leave policy settings unchanged for the second consecutive meeting, after a 25 -point interest rate (BPS) reduced to a range of 4.25 % -4.5 % in December.
The CME Fedwatch tool shows that investors see almost no chance to reduce average in March while pricing by about 30 % of the possibility of reducing 25 points in May in May. Consequently, revised expectations and comments from the Federal Reserve Chairman Jerome Powell can lead the US dollar evaluation (USD) instead of the same interest rate decision.
In December, DOT conspiracy showed that policy makers expected a total of 50 basis points in the policy rate in 2025, with GDP growth expected to grow by 2.1 % and see annual personal consumption expenditures (PCE) by 2.5 % at the end of the year.
“It is expected that FOMC will maintain a large scale on the police position unchanged to hold a second consecutive meeting,” said TD Securities analysts who suffer from the Federal Reserve event. They added: “Based on the fixed signal provided by the labor market amid sticky inflation, we expect the President Powell to retract patience with regard to politics decisions. We also do not expect significant changes on Sep at the Federal Reserve Bank or to the QT plans at the present time.”
When will the Federal Reserve announce its interest rate of interest and how can it affect the US/USA dollars?
The US Federal Reserve is scheduled to announce the interest rate decision and publish a monetary policy statement with the revised Sep on Wednesday at 18:00 GMT. This will follow the press conference of the President of the Federal Reserve, Jerome Powell, starting from 18:30 GMT.
The disappointing total economy data from the United States, as well as US President Donald Trump’s advertisements, have been revived fears of the American economy that goes to recession. According to the GDPNOOW model at the Federal Reserve in Atlanta, the American economy is expected to shrink at an annual rate of 2.4 % in the first quarter.
In the event that the DOT plot is shown, the 75 -point drop -down projection can be considered as a Dofish’s transformation in average expectations and leads to another leg of the US dollar sale. On the other hand, the review can enhance charity in Sep, with one -piece official prediction of officials, the currency.
If the rate of interest rate remains unchanged, investors will check inflation and growth. It can hurt the descending review of the US dollar growth expectations, while the bullish review of inflation expectations, without significant change in gross domestic product estimates, can support the US dollar in the short term.
Powell’s comments can also affect the performance of the US dollar. If you reduce concerns about economic shrinkage and put more focus on the uncertainty surrounding inflation expectations, noting the Trump administration tariff, the US dollar is likely to outperform its competitors in the short term. On the contrary, if Powell admitted signs of exacerbation of growth expectations, the US dollar is likely to face a difficult time to find demand.
Eren Sengezer, the main analyst of the European session at FXSTREET, provides a short -term technical look for EUR/USD:
“Euro/US dollar is still technically optimistic in the short term as it remains in the upper half of the two -month -old slopes of slope. In addition, the RSI Index Index on the daily chart is close to 70, reaffirming the bullish position.”
“In the upscale direction, 1.1000 (the upper canal limit, round level) corresponds as a major resistance level before 1.1100 (fixed level, round level) and 1.1180 (fixed level of October 2024). The search south, the first support level (SMA) can be monitored in the middle An extended about 1.0645 (SMA 20 days).
Questions and answers in US dollars
The USD (USD) is the official currency of the United States of America, and a “reality” currency for a large number of other countries where there is a circulating alongside local notes. It is the most trading currency in the world, as it represents more than 88 % of the rotation of global foreign currencies, or on average $ 6.6 trillion in transactions per day, according to data from 2022. In the aftermath of World War II, the United States took over the British pound the world reserves. For most of its history, the US dollar was backed by gold, even the Bretton Woods agreement in 1971 when the golden standard went.
The most important individual factor that affects the value of the US dollar is the monetary policy, which is formed by the Federal Reserve (Fed). The Federal Reserve has two states: to achieve price stability (control of control) and enhance full employment. Its primary performance to achieve these two goals is to adjust interest rates. When prices rise very quickly and inflation is 2 % higher than the Federal Reserve goal, the Federal Reserve will raise rates, which helps the value of the dollar. When inflation decreases to less than 2 % or the unemployment rate is very high, the Federal Reserve may reduce interest rates, which weighs to green.
In maximum situations, the Federal Reserve can also print more dollars and quantitative mitigation (QE). QE is the process that the Federal Reserve increases significantly from the flow of credit in a suspended financial system. It is a measure of the non -standard policy used when the credit is dry because banks will not lend to each other (for fear of failing to pay the opposite end). It is the last resort when it is unlikely to achieve interest rates simply the necessary result. The Federal Reserve is the preferred to combat the credit crisis that occurred during the great financial crisis in 2008. It includes the printing of the Federal Reserve more dollars and their use to buy US government bonds mostly from financial institutions. QE usually leads to the weakest US dollar.
The quantitative tightening (QT) is the opposite process in which the Federal Reserve stops buying bonds from financial institutions and does not invest the manager from the bonds he holds in new purchases. It is usually positive for the US dollar.
