More gains ahead for US dollar
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The US Federal Reserve continued on their rate hiking cycle yesterday by lifting short-term interest rates to 2.25%, which was widely expected by the Market and marks the 3rd time this year that rates have moved higher. In the following monetary statement, Fed President Jeremy Powell also sounded upbeat about the state of the economy noting that the economic numbers were looking positive, which included inflation, which is currently within the Feds target rate. “His statements on the economy at the press conference was pretty bullish,” said Dec Mullarkey, managing director of investment strategies at Sun Life Investment Management in Wellesley, Massachusetts. “On the inflation front, he saw things as pretty contained.” He added. Many analysts now expect the Fed to continue their rate hiking cycle well into next year until they reach the Nuetral rate of around 3 percent and with such predictions, the US dollar is likely to go from strength to strength as investors snap up the greenback as a high yielding currency. “The key takeaway from today’s meeting is that the committee is very much on the same page for the next few quarters. said Eric Winograd, senior economist at AllianceBernstein. The Fed is highly likely to raise interest rates 25 basis points per quarter until next summer, when the target rate will reach the committee’s estimate of neutral,” he added.
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