Dollar drops as Fed’s Powell says rates near neutral

The dollar tumbled from two-week highs on Wednesday after Federal Reserve Chairman Jerome Powell said that interest rates are just below neutral, raising expectations that the U.S. central bank is closer to the end of its rate hike cycle.

Powell said the policy rate, at 2-2.25 percent, is now “just below” the broad range of estimates of neutral, which in September was 2.5-3.5 percent.

That contrasts with comments on Oct. 3 when Powell said the Fed might raise rates past neutral, adding that they are probably “a long way” from that point.

The Fed has not raised the rates in order to gain ground on neutral between Oct. 3 and today, so therefore his view of the economy has declined,” said Lou Brien, market strategist at DRW Trading in Chicago.

The dollar has been under pressure in recent weeks on signs that the Fed might reduce the pace of rate increases amid slowing global growth, peak corporate earnings and the escalating trade tensions.

U.S. President Donald Trump has also expressed frustration with Fed rate hikes. Trump said in a Washington Post interview on Tuesday that he was “not even a little bit happy” with the Fed chairman and that the central bank’s policies are hurting the economy.

Minutes from the Fed’s Nov. 7-8 meeting, to be released on Thursday, will next be evaluated for further indications of how many more times the U.S. central bank is likely to hike interest rates.

The dollar has been under pressure in recent weeks on signs that the Fed might reduce the pace of rate increases amid slowing global growth, peak corporate earnings and the escalating trade tensions.

U.S. President Donald Trump has also expressed frustration with Fed rate hikes. Trump said in a Washington Post interview on Tuesday that he was “not even a little bit happy” with the Fed chairman and that the central bank’s policies are hurting the economy.

Minutes from the Fed’s Nov. 7-8 meeting, to be released on Thursday, will next be evaluated for further indications of how many more times the U.S. central bank is likely to hike interest rates.

 

/reuters.com

Stay updated with INFOEUROPEFX to find out latest news about forex.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.