Wonderful Introduction:
If the sea loses the rolling waves, it will lose its majesty; if the desert loses the dancing of flying sand, it will lose its magnificence; if life loses its real journey, it will lose its meaning.
Hello everyone, today Avatrade Avatrade Avatrade will bring you "[Ava Ava Foreign Exchange Decision Analysis]: The Federal Reserve maintains interest rates unchanged, implying a 50 basis point interest rate cut this year, and the global market is concerned about economic uncertainty." Hope it will be helpful to you! The original content is as follows:
The US dollar index rose slightly on Wednesday, with the Federal Reserve keeping interest rates unchanged as market expectations, but suggesting that policy-makers expect to cut interest rates by 50 basis points by the end of this year.
The Fed held interest rates unchanged as expected on Wednesday, and hinted that interest rates could be cut later this year. The Federal Reserve stated in its post-conference statement that "the uncertainty about the economic outlook has increased."
After the two-day monetary policy meeting, the Federal Reserve announced that it would maintain the interest rate range of 4.25% to 4.5% unchanged at 2 p.m. Eastern Time on Wednesday, and announced that it would slow the balance sheet shrinkage from April.
Federal Chairman Powell mentioned tariffs for the first time at a post-conference press conference and admitted that Trump's policies have affected the economy. In addition, Powell pointed out that the policies introduced by Trump's new administration will affect the economy, but he will be cautious about avoiding making too clear judgments about the impact.
Powell also used the word "uncertainty" several times. He reiterated the uncertainty of the potential impact of tariffs on the U.S. economy and highlighted the risks faced by the Federal Reserve's employment and inflation expectations.
Helen Given, head of trading at MonexUSA, said: "The US dollar is relatively calm considering all factors. This is related to the fact that no one in the market is willing to stand on the wrong side in trading."
Although the US dollar has stabilized recently, its short-term trend still depends on the strength of the upcoming economic data.
Asian Market
As widely expected, the Bank of Japan kept its overnight redemption rate at around 0.50%.
The Bank of Japan stated in a statement that growth is expected to remain higher than the potentialAt level, inflation progress is still expected to achieve the 2% target. However, policy makers point to high levels of uncertainty, especially global trade tensions and policy shifts in major economies as major risks.
A significant shift in the Bank of Japan's tone is its greater focus on exchange rate movements as a key factor in affecting inflation. The central bank acknowledges that as businesses increasingly raise wages and prices, exchange rate trends are “more likely to affect prices” than in the past.
This suggests that further depreciation of the yen may accelerate price increases and affect future monetary policy decisions.
Japan exports rose 11.4% year-on-year to 9,191B yen in February, a fifth straight month of growth driven by strong demand from the United States and China. Exports to the United States increased by 10.5% year-on-year, while exports to China increased by 14.1% year-on-year, with a stronger growth.
At the same time, imports fell -0.7% year-on-year as demand for crude oil and coal weakened, the first decline in three months. This shift in trade dynamics helped Japan restore its trade surplus to JPY584.5B, the first positive balance in two months.
After seasonally adjusted, exports rose 4.0% month-on-month to 9,688B yen, while imports fell -4.1% month-on-month to 9,505B yen, resulting in a surplus of 182B yen.
European market
The overall CPI of the euro zone in February was finally determined to be 2.3% annualized, lower than 2.5% in January. The core CPI, excluding energy, food, alcohol and tobacco, fell slightly from 2.7% to 2.6% year-on-year.
The biggest driver of inflation in the euro zone is the service industry, which contributed +1.66 percentage points, followed by food, alcohol and tobacco (+0.52 percentage points). Non-energy industrial products and energy contributed less, with energy growth only +0.01 percentage point.
In the broader EU, inflation ended up being 2.7% year-on-year, down from 2.8% in January. The inflation gap between Member States remains clear, with the lowest inflation rates in France (0.9%), Ireland (1.4%) and Finland (1.5%), while the highest inflation rates in Hungary (5.7%), Romania (5.2%) and Estonia (5.1%). aihuaforex.compared with January, inflation rates in 14 member states fell, six member states remained unchanged, and seven member states rose.
U.S. Market
As generally expected, FOMC has stabilized interest rates at 4.25-4.50%. Meanwhile, the Fed announced a key shift in its quantitative tightening strategy, saying it will slow down the balance sheet shrinking from $25B to $5B starting in April.
The Fed acknowledged in its accompanying statement that recent economic data continue to indicate a “stable” expansion, “low unemployment” and a “stable” labor market conditions. Meanwhile, the Fed noted that inflation is still "slightly high", which strengthens the need for cautious decision-making.
The updated economic forecast shows that the Fed's interest rate cut prospects have not changed, and the median federal funds rate forecast still points to only two interest rates this year, and interest rates will remain at 3.9% by the end of 2025. Looking ahead, the Fed continues to expect interest rates to be 3.4% by the end of 2026 and 3.1% by the end of 2027
The Fed's GDP growth forecast has been lowered, reflecting growing concerns about economic headwinds. The U.S. economy is currently expected to grow only 1.7% in 2025, down from the previous forecast of 2.1%, while growth forecasts for 2026 and 2027 are also slightly lowered to 1.8%.
At the same time, the core PCE inflation forecast for 2025 has been raised from 2.5% to 2.8%, indicating that price pressure may be longer than previously expected. However, core inflation forecasts for 2026 and 2027 remain unchanged at 2.2% and 2.0%, respectively, indicating that people believe inflation will gradually return to the 2% target.
The above content is all about "[Ava Foreign Exchange Decision Analysis]: The Federal Reserve maintains interest rates unchanged, implying that interest rate cuts by 50 basis points this year, and global markets pay attention to economic uncertainty". It is carefully aihuaforex.compiled and edited by the Avatrade Foreign Exchange editor. I hope it will be helpful to your trading! Thanks for the support!
Every successful person has a beginning. Only by having the courage to start can you find the way to success. Read the next article now!