Fed steers gains in equities and bonds, losses in volatility
The Federal Reserve held interest rates steady at 22-year highs for a second straight meeting on Wednesday.
It means that the Fed Funds Rate remains at a range of 5.25%-5.50% as the central bank waits to see how its aggressive credit tightening campaign filters through the US economy. It did, though, leave the door open to a further increase in borrowing costs if needed. The policy statement acknowledged the US economy's surprising strength, but also took in the tighter financial conditions faced by businesses and households.
(AI Video Transcript)
The Federal Reserve
The Federal Reserve, which is like the "boss" of the US economy, has decided to keep interest rates the same for the second time in a row. This means that people who borrow money will still need to pay a high interest rate. The Federal Reserve wants to see how this is affecting the economy before deciding whether to change the rates again. They did say that they might increase the rates in the future, but they haven't made a final decision yet.
The US economy
The Federal Reserve also talked about the US economy and how it's doing. They said that the economy is doing well, but businesses and households are facing some challenges because of the high interest rates. They also mentioned that inflation, which means prices going up, has been going down but is still higher than what they would like it to be. They said that they need to do more to make people feel confident in the economy.
The USD
In terms of the financial market, the value of the US dollar went down because of the Federal Reserve's decision. There was a technical analysis called "Andrew's Pitchfork" that predicted this would happen. The USD is now trading at a lower price compared to other currencies. This is the second day in a row that the dollar has gone down because of the Federal Reserve's decision.
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