Interest rates are raised by 25 basis points by the Federal Reserve.
As anticipated, the Federal Reserve raised interest rates by 25 basis points Wednesday, raising the range of benchmark lending rates to 4.50% to 4.75%. Future expectations were the main topic, which caused the US dollar and Treasury rates to decline as the S&P 500 rose. Since the tightening started, the Chicago Fed National Financial Conditions Index has dropped to its lowest level, which indicates a lessening of market liquidity.
Jerome Powell, the Chair, Speaks on Monetary Policy
Chair Powell emphasized in his statement that the central bank will need to retain a restrictive posture for a while. He also said such cutbacks are unlikely to happen this year if the economy performs as predicted. The financial markets kept betting on further rate reduction in spite of Powell’s comments. In response to the news, the US dollar, bond rates, and gold all saw changes.
Powell talks on the improving financial conditions
When asked about the recent easing of financial conditions, Powell responded that long-term reforms rather than quick ones are what are important. This keeps markets open to disappointment if a shift turns out to be implausible. The non-farm payroll report on Friday and subsequent economic data will be closely watched by market investors.
During the Federal Reserve decision, gold increases.
During the Federal Reserve’s rate decision, gold saw substantial gains and closed at a new high for the year. Despite its outstanding performance, technical analysis shows that the upside momentum is waning and that there is a bearish RSI divergence.