A not so dovish hike by the Fed

The US Federal Reserve raised interest rates and reduced their rate hike schedule, as widely expected, but they refrained from removing “further gradual increases” from their statement. The statement said, “The Committee judges that some further gradual increases in the target range for the federal funds rate will be consistent with sustained expansion of economic activity, strong labor market conditions, and inflation near the Committee’s symmetric 2% objective over the medium term.”

With respect to the dot plots, the Fed delivered. They reduced their 2019 forecast of rate rises from three to two and now see only 4 more hikes through 2021, with one each in 2020 and 2021.The US dollar rallied strongly against its major trading partners after the less-dovish statement.

The euro gave up most of its gains against the greenback and remains back in the middle of the December trading range.

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Ed Moya

Ed Moya

Senior Market Analyst at OANDA
With more than 20 years’ trading experience, Ed Moya is a market analyst with OANDA, producing up-to-the-minute fundamental analysis of geo-political events and monetary policies in the US, Europe, the Middle East and North Africa. Over the course of his career, he has worked with some of the world’s leading forex brokerages and research departments including Global Forex Trading, FX Solutions and Trading Advantage. Most recently he worked with TradeTheNews.com, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including BNN, CNBC, Fox Business, and Bloomberg. He is often quoted in leading print and online publications such as the Wall Street Journal and the Washington Post. He holds a BA in Economics from Rutgers University. Follow Ed on Twitter @edjmoya ‏
Ed Moya