New York Money Market Conditions: Dollar strengthens after Fed officials signal higher interest rates, by InfoQuest

InfoQuest – The US dollar rose against major currencies in trading on the New York Forex Exchange on Tuesday (May 21), with continued support for the dollar by Federal Reserve officials sending signals that the Fed should wait for more evidence of slowing inflation. Before deciding to cut interest rates while investors watch the minutes of today's Fed meeting. To find clear signals about the direction of the Fed interest rate

The dollar index, which measures the dollar's movement against six major currencies, rose 0.05% to 104.62.

Several Fed officials indicated that the Fed should wait for more evidence of slowing inflation. Before you decide to lower interest rates

Federal Reserve Vice Chairman Philip Jefferson said at a panel organized by the New York Mortgage Bankers Association on Monday (May 20) that he cannot say with certainty that US inflation will slow to the Fed's 2% target, although… Although the April Consumer Price Index (CPI) came in lower than expected. In addition to recommending that the Federal Reserve manage its policy carefully and cautiously

As Michael Barr, the Fed's vice chairman for regulatory affairs, said at a forum organized by the Federal Reserve Bank of Atlanta, the release of the first-quarter inflation numbers did not make him more confident that the Fed should start easing monetary policy. The Fed also recommended that it take more time to become confident that inflation will return to the Fed's 2% target.

Inflation slowed only slightly in the first quarter of this year and the economy was stronger than expected, Cleveland Fed President Loretta Mester told Bloomberg Television yesterday. This makes her think the Fed should keep interest rates high for longer.

Investors are watching the minutes of the Federal Reserve's April 30-May 1 monetary policy meeting, which will be released on Wednesday, US time. To find signs pointing to the direction of Fed interest rates, CME Group's recent FedWatch tool indicates that investors are giving 64.8% of their weight in expecting the Fed to cut interest rates by 0.25% at its September meeting.

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