FT : What you need to know after FOMC meeting

What you need to know after FOMC meeting

Dollar falls as Fed signals just 2 further increases likely in 2017

High quality global journalism requires investment. Please share this article with others using the link below, do not cut & paste the article. See our T&Cs and Copyright Policy for more detail. Email ftsales.support@ft.com to buy additional rights.
https://www.ft.com/content/8f256ac6-09aa-11e7-ac5a-903b21361b43

Key points

● Treasury yields have fallen, with the 10-year yield lower by 12 basis points to 2.48 per cent

● Market expectations for at least four Federal Reserve rate increases this year dipped to less than one-in-five

● US dollar falls. Dollar index down as much as 1 per cent while euro hits five-week high at $1.0745

● Emerging market currencies rise, Mexican peso reaches best level since Trump was elected at 19.19 pesos

● Asian equities struggle to match Wall Street rally. Gainers led by the energy sector

● Wall Street rallied. The S&P 500 ended 0.8 per cent higher at 2,385 — just 0.4 per cent short of its record close

● Commodities rally as focus turns to growth — copper, oil and gold all higher

https://www.ft.com/content/8f256ac6-09aa-11e7-ac5a-903b21361b43

Financial markets reacted swiftly after the US Federal Reserve on Wednesday tightened policy and signalled just two further rate increases are likely for 2017.

When Fed doves raise rates

While the Fed quickened the pace of easing with a quarter-point just three months after the last one, it left its median forecasts for a total of three rate rises in 2017 unchanged.

Leading up to the meeting, a string of upbeat economic data and hawkish remarks from a handful of Fed speakers had prompted some to expect the Fed’s “dot plot” of interest-rate projections could be revised to reflect four rate rises in 2017, up from its previous estimates of three moves.

The median implies that rates will rise to 1.375 per cent by the end of this year, with a three-quarter percentage point increase to follow in 2018.

Here’s a look at the dot plot in March:

Download attachment-1