The Federal Reserve again keeps rates at 5.25%, resulting in the stock market rising for a third day. However, the Fed Chairman dismisses the idea that future interest rate hikes are impossible. Nonetheless, US bond yields retrace downwards, and the US Dollar declines, supporting the US stock market. Most economists believed the Federal Reserve would keep rates unchanged on this occasion, but December’s meeting is less specific. According to the CM FedWatch Tool, the possibility of a rate hike in 41 days is 20%. However, if employment data and the inflation rate reach higher than expected, the chances of a hike will rise. If the possibility increases, the stock market will witness selling pressure and the Dollar may again rise.
The US Dollar Index rose in value on Tuesday and Wednesday but came under significant pressure after the Federal Reserve’s decision. This morning, the Dollar index declined by a further 0.50% and is the worst-performing currency of the day. The best-performing currency is the Euro. However, investors should remember that the Bank of England will announce their interest rate decision this afternoon. If the Bank of England’s monetary committee votes differently, the Pound’s price will likely be volatile.
