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Fed edges towards dovishness

FOMC notes increased global turmoil and lower inflation, suggesting that a March hike is now a reduced possibility.

CFDs are a leveraged product and can result in losses that exceed deposits. Trading CFDs may not be suitable for everyone, so please ensure you fully understand the risks and take care to manage your exposure.
Federal Reserve building
Source: Bloomberg

Markets got the more dovish tone they were hoping for, with the Federal Reserve noting slowing economic growth and tipping its hat towards the idea inflation won't rise towards 2% as fast as it thought in December. This doesn't mean a March move is out of the question, but the reference to global economic developments means there will have to be plenty more improvement in the US economy before one is a definite possibility.

With the risks to the economy no longer seen as 'balanced' this is a Fed committee drawing in its horns. It was never going to admit that December's move was a mistake, but today's statement acknowledges it is not time to get carried away with rate hikes.

The market reaction was muted but it seems the way is clear for more upside for stocks and FX, while the dollar will struggle to make much headway given the trimming of expectations for rate hikes. The rally, it seems, has more life left in it.

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CFDs are a leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.