The Fed strengthened the USD again. Up faster than expected?

Yesterday evening, the records of the talks during the last meeting were published FOMC. The reading may have strengthened the US dollar. EUR / USD exchange rate hit a record level this year, falling below 1,1200.

As is clear from the so-called minutek, representatives Federal Reserve they noted that the central bank should be prepared to adjust the pace of asset purchases and raise interest rates earlier than expected. Accelerated responses may be caused by persistently high inflation, while at the same time the path of growth for the economy remains contingent on the epidemic.

You can see a change in attitude among Fed members

Fed policy makers pointed out that uncertainty about the outlook for inflation has increased and that significant price pressure should last longer than previously expected due to continuing supply bottlenecks. At the same time, FOMC members agreed that progress in vaccination and easing restrictions should continue to support economic recovery and employment growth, as well as falling inflation. However, the risks to the growth outlook remain high.

Mary Daly, San Francisco Fed chairman, said yesterday that she sees arguments in favor of accelerating the Fed's bond purchases reduction. This means a change of attitude, as she was much more cautious about this before.

Strong data from the US economy

The number of weekly applications for unemployment benefits in the US has fallen to its lowest level since 1969. Q2,1 GDP was revised upwards to 0,6% and US PCE inflation accelerated by XNUMX% in October. in relation to the previous month, which may indicate a sharp economic recovery and persisting price pressure.

Moreover, personal spending in the US increased by 1,3% in October, against 0,6%. growth in September. The reading also exceeded market forecasts at 1 percent. This is the fifth increase in a row and the largest increase in 7 months. American consumers continue to spend more amid large wage increases and despite rising prices. In October, Americans spent more money on car purchases and on international travel.

How many interest rate hikes in 2022?

The data seem to show that the US economy may be in good shape, which may justify accelerating the decline in the purchasing rate. Soon the market may focus on how many US interest rate hikes there will be in 2022, but here a hint will appear only in December, when the Fed releases its macroeconomic projections.