- Posted by currencies in Bank of England, Currency, Dollar, Economy, EUR, Fed, GBP, Inflation, Rate Cuts, Rate Hikes, Sterling, UK, Uncategorised
- September 21, 2023
- No Comments
The dollar hit a 6-1/2 month high after the U.S. Federal Reserve signalled policy would remain restrictive for longer, even after holding rates steady, while the Swiss franc dropped after the Swiss National Bank kept rates unchanged.
The pound sank to its lowest since April before the Bank of England announces policy later in the day, the yen was at its lowest since November before Friday’s Bank of Japan policy announcement, while central banks in Sweden and Norway both met expectations for 25 basis point rate rises.
The Fed met market expectations at its monetary policy meeting on Wednesday, holding interest rates steady at the 5.25%-5.50% range.
The U.S. central bank, however, stiffened a hawkish monetary policy stance that its officials increasingly believe can succeed in lowering inflation without wrecking the economy or leading to large job losses.
Along with another possible rate hike this year, the Fed’s updated projections show significantly tighter rates through 2024 than previously expected.
Elsewhere, sterling was last trading just above a fresh four-month low against the greenback ahead of the Bank of England’s rate decision later in the day.
Data released on Wednesday showed that Britain’s high inflation rate unexpectedly slowed in August, raising questions about how much higher the central bank will take interest rates.
Market participants had leaned heavily toward the BOE hiking rates again today for what would be the 15th time, but expectations quickly shifted following the data.