The Fed raised the feet. The markets breathed a sigh of relief. Shares up, dollar down

As expected by American investors Federal Reserve decided to raise the range for the federal funds rate by 75 basis points, to the level of 2,25-2,50 percent, the highest level since 2019. It was the fourth consecutive increase in interest rates in the US.

Powell has spoken, stocks up

Before the announcement of the decision, not only the scale of the increase was important, but also what Jerome Powell, chairman of the US central bank, will later report to journalists.

Fed chief said that the current hikes in the target range will be appropriate and that he is prepared to adjust the monetary policy bias if there are risks that could hinder the achievement of the Committee's goals FOMC. During the press conference Powell He added that he is not able to predict the scope of monetary policy actions for the next year and that the next decisions will depend on the data. He also added that the central bank will look for a moderately restrictive level until the end of the year, which means the level of 3%. up to 3,5 percent for the federal funds rate target range. The most important thing seems to be that it will soon become appropriate to slow down the pace of rate hikes as the Fed assesses the impact of the cumulative monetary policy adjustments on the economy and inflation so far.

This is somewhat consistent with what we mentioned yesterday that the Fed may end the cycle at 3,5%, with three meetings remaining until the end of the year. Thus, increases by 75 bps could come to an end and we will see monetary policy tightening at 25 bps per meeting or one 50 bps and two 25 bps each.

Is the market discounting the end of hikes?

Financial markets may thus start to discount the end of the cycle of interest rate increases in the US or at least a longer pause in monetary tightening. As a result, the US dollar could weaken yesterday, and the stock indices may have weakened kryptowaluty could gain value. On Wednesday, the Dow gained 1,37%, S & P 500 increased by 2,62 percent and the Nasdaq by 4,06 percent. All S&P sectors recorded growth, led by communications services, technology and consumer spending. Investors are now waiting for Q106,5 GDP data to get hints on the state of the US economy. The dollar index weakened below XNUMX points, approaching the lowest levels in almost a month.