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USD: Fed minutes say nothing about rate cuts by May 2024


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The minutes of the last meeting of the US Federal Reserve (Fed) have been released and there appears little appetite for cutting rates anytime in the near future as inflation remains high relative to the target rate.

 

 Jeremy Naylor | Analyst, London | Publication date: Wednesday 22 November 2023 11:34

The minutes show voting members still worry that inflation could be stubborn or move higher and that more may need to be done to ensure that does not occur. They at least said that policy will need to stay "restrictive" until data shows inflation on a convincing trek back to the central bank's 2% goal. Along with that, however, the minutes showed that members believe they can "proceed carefully" and make decisions "on the totality of incoming information and its implications for the economic outlook as well as the balance of risks." The release comes amid overwhelming sentiment on Wall Street that the Fed is done hiking. Traders in the fed funds futures market are indicating virtually no probability that policymakers will increase rates again this cycle, and in fact, are pricing in cuts starting in May. Ultimately, the market expects that the Fed will enact the equivalent of four quarter percentage point cuts before the end of 2024.

The Federal Reserve

In a recent video, the Federal Reserve's discussion about interest rates was revealed. It seems that they are not looking to cut rates in the near future because they are worried about inflation. They want to keep inflation around 2%, but it is currently too high. The members of the board are thinking about taking more action to stop inflation from getting worse.

The US dollar

When it comes to the USD, it hasn't been doing too well recently. It has become weaker compared to other currencies like the euro. The dollar has reached its lowest point since August, but it might not go up much more. It is expected to keep going down. Right now, it is at 103.24, and the next target price is 102.58, with support levels at 101.40.

Gold

The weak US dollar has actually been good for the price of gold. Gold has gone up and is now back above $2,000. This increase follows a similar surge at the end of October. If gold can stay at this level for a little while, it could reach record highs achieved on May 3rd at $2,082. So, gold is going up because the dollar is getting weaker.

 

 

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