Yesterday’s FOMC: Hawkish Pivot Boosts the Dollar
Yesterday’s FOMC: Hawkish Pivot Boosts the Dollar
The Fed held the federal funds rate steady at 3.50%–3.75%, as widely expected. But the real story was in the details:
The policy statement was dramatically shortened and stripped of forward guidance.
The Summary of Economic Projections (dot plot) turned notably hawkish: nine officials now see at least one rate hike by year-end, with 2026 inflation forecasts revised higher (PCE to 3.6%).
Warsh emphasised data-dependence, inflation as a “choice,” and a commitment to restoring credibility.
Markets reacted with a risk-off move (stocks sold off), but the US Dollar Index (DXY) jumped, breaking toward the 99.50–100.00 zone. Higher US rate expectations relative to the rest of the world provided immediate support.
This Morning’s BoE Decision: Further Tailwind for USD
The Bank of England held its Bank Rate at 3.75%, in line with expectations, but the accompanying tone and vote split reinforced a more cautious stance amid soft UK labour data and easing inflation pressures. GBP/USD dropped over 100...
