The Federal Open Market Committee (FOMC) announced Wednesday that it has left the benchmark interest rate, the target range for federal funds, unchanged at 0% -0.25% as widely expected.
In its policy statement, the Federal Reserve reiterated that it is committed to using its full range of tools to support the United States economy, noting that the path of the economy will depend on the course of the coronavirus outbreak.
Follow our live coverage of the FOMC decision and market reaction.
Fed Press Conference: Live broadcast of President Jerome Powell’s speech – July 29.
With the initial market reaction, the US Dollar Index (DXY) fell to its lowest level in more than two years at 93.31, but had no difficulty organizing a modest rebound. At time of writing, the DXY fell 0.37% daily to 93.38.
Quick Fed analysis: sadness and doom to push the dollar even lower, and stocks can finally follow.
Reality bites, and the Federal Reserve has been unable to ignore it. The resurgence of the coronavirus is already evident in jobless claims and consumer confidence figures, and the Fed is likely to have the Gross Domestic Product figures for the second quarter, reflecting first-wave damage.
EUR / USD hits new multi-year highs after the FOMC, about to test 1.1800.
The EUR / USD pair was trading at new multi-year highs and after the Federal Reserve decision was released it peaked at 1.1792 and then fell modestly back, finding support at 1.1770.
Key Findings of the Policy Statement (via Reuters)
“The ongoing health crisis will weigh heavily on economic activity, employment and inflation in the short term.”
“Economic activity and employment have recovered somewhat in recent months, but remain well below their levels at the beginning of the year.”
“The epidemic poses considerable risks to the medium-term economic outlook.”
“It will keep the dollar exchange lines and the FIMA repository facility for foreign central banks open until March 31.”
“It will maintain treasury and agency-backed purchases of securities at least at the current rate and continue repos operations overnight and forward.”
“Expect to maintain the current rate of federal funds until the safe economy has withstood recent events and is on track to meet the central bank’s maximum price stability and employment targets.”
“The interest rate on excess reserves has not changed by 0.10%.”