Τhe Fed cut interest rates for the third time this year but left open the question of whether it would cut them further. The dollar fell against a basket of major currencies.
The Fed lowered its benchmark rate by 25 basis points to a target range of 1.50% to 1.75% looking to bolster economic growth. But it dropped a reference in its policy statement that it would “act as appropriate” to sustain economic expansion. Lack of an explicit signal the Fed was done with easing for now was taken as less hawkish than expected.
Comments by Fed Chairman following the U.S. central bank’s statement further boosted the notion that additional cuts in the near-term are unlikely. The current stance of monetary policy is likely to remain appropriate. Ιt would take a material reassessment in the outlook for the Fed to change its current stance, Powell said.
Powell ticked off an extensive list of reasons why he feels the economy is doing well, and likely to continue to do so. Robust consumer spending, strengthening home sales, and asset prices he considered healthy but not to a level of excess.
START TRADINGForex – Third cut of interest rates by FED
The outcome of a U.S. Federal Reserve meeting later on Wednesday is also limiting overall market volatility.
The dollar had briefly gained earlier after data showed that the U.S. economy slowed less than expected in the third quarter. The dollar index rose to 98.00 as Powell spoke, the highest since Oct. 17, before retracing back to 97.53, down 0.16% on the day.
Sterling edged higher on Wednesday after British Prime Minister Johnson won parliamentary approval to hold a general election in December. But moves were limited as large currency options expiring this week curbed volatility. The pound was broadly flat against both the euro, at 86.40 pence, and the dollar, at $1.2869. The market assessed risks associated with the Dec. 12 election.
Oil prices came under pressure on Thursday from rising U.S. crude oil stocks and weak factory activity in China. Brent crude futures were down 20 cents at $60.41 a barrel by 1156 GMT, erasing earlier gains. WTI crude futures were down 73 cents at $54.33. On the month, however, they are set for a rise of about 0.5%, its biggest monthly gain since June.
PLEASE NOTE The information above is not investment advice.
Sources: Reuters, Investing, CNN money