On Wednesday, following a two-day meet of Fed policymakers, the US Federal Reserve had decided to hold benchmark borrowing cost steady at 0.25 per cent while keeping its monthly bond-repurchase program unbroken as Fed Chair Jerome Powell had voiced a more dovish tone on his post-FOMC minutes’ remarks, however, had nodded to a rapid acceleration in US economic growth.
Besides, after US Fed policymakers had unanimously voted to keep its benchmark lending cost unchanged, Fed Chair Powell was quoted saying on his post-FOMC minutes’ remarks that this was not the time to talk about tapering the Central Bank’s asset repurchase program, eventually adding to a bearish bias on a softening American currency, however, the US 10-year Treasury bond Yields rose to 1.64 per cent followed by the Fed statement.
US Fed keeps interest rate steady as US Dollar falls sharply
On top of that, adding that the US Fed would neither raise interest rate nor tail off its bond repurchase program until further improvement in labour market alongside solid signs of an inflation-surge and a full-fledged recoup from the pandemic-led fiscal slump, the Fed said, “The path of the economy will depend significantly on the course of the virus, including progress on vaccinations.
The ongoing public health crisis continues to weigh on the economy and risks to the economic outlook remain. ” Meanwhile, citing the latest Fed statement had underscored that it might not raise interest rate until late-2023, a Chief US economist at Capital Economics, Paul Ashworth wrote in a client note following the Fed statement, “The Fed offered no hints that it was considering slowing the pace of its asset purchases, let alone thinking about raising interest rates.
As it stands, there is nothing here to change our view that the Fed won’t begin to taper its monthly asset purchases until the start of next year and won’t begin to raise interest rates until late 2023. ” The US Dollar Index (DXY) measured against a basket of six major currencies on an average nosedived as much as 0.4 per cent to 90.54 shortly after the Fed statement.