Federal Reserve: Higher-for-longer path reshapes cuts – Rabobank
Rabobank's Senior Macro Strategist Bas van Geffen discusses the latest FOMC decision, noting a unanimous 25 bps hike in the Federal funds rate and a shift to a higher policy rate trajectory for similar inflation outcomes.
Rabobank's Senior Macro Strategist Bas van Geffen discusses the Federal Reserve's recent decision, noting a unanimous 25 basis point increase in the Federal funds rate. The Fed now projects a higher policy rate trajectory to achieve similar inflation outcomes, leading to fewer anticipated cuts next year. The new policy rate assumption has been raised to 3.25-3.50%, signaling a shift in the Fed's stance.
The Federal Reserve's commitment to monetary policy independence is evident, with projections suggesting the policy rate could be higher by the end of President Trump's term. This decision has sparked a pause in the US Dollar rally, with AUD/USD retaking support at 0.7100, while USD/JPY recovers from a brief dip. Gold prices have also climbed, hitting new weekly highs, although initial resistance around $4,400 remains.
Meanwhile, the Bank of England maintained its Bank Rate at 3.75% but expressed a more hawkish outlook due to deteriorating inflation expectations.
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