fbpx

PU Prime App

Exclusive deals on mobile

  • Market Insights  >  Weekly Outlook

2 February 2023,06:13

Weekly Outlook

Ahead of NFP, Fed Implements Lowest Rate Hike in 10 Months

2 February 2023, 06:13

Share on:
FacebookLinkedInTwitterShare
Share on:
FacebookLinkedInTwitterShare

On Wednesday, the U.S Federal Reserve released its monetary policy decision for February 2023, raising the benchmark interest rate by 25 points at the conclusion of the FOMC meeting, as widely expected by the markets. This brings the target range of 4.5% to 4.75%, making it the highest since October 2007.

This also marks the lowest rate hike since March 2022, coming after a series of historically high, 75-point hikes that the Fed has implemented in attempts to bring down inflation.

Post-Market

Markets turned risk-on at the news, with stocks closing higher and the S&P 500 rising over 1%, while the dollar index dropped to a 9-month low around 101. 

While the Fed has slowed its pace of rate hikes as inflation shows signs of moderating, what the markets are truly looking out for is the much-discussed “dovish pivot”, a point when the Fed will cease or even reverse its Fed Fund Rate, the guidance that the central bank gives banks on the interest for overnight lending. 

As usual, market participants are scrutinising every word of Fed Chair Jerome Powell, whose post-FOMC meeting speech is usually watched closely for clues on the Fed’s future direction. 

In the post-meeting statement, the FOMC has also switched up some of the language from its previous meeting. While it previously said that the “pace” of future rate hikes would depend on the efficacy of previous tightening, it most recently changed “pace” to “extent” – suggesting a possible end in sight to the rate hike cycle.

This end, though, likely will not be seen in the Fed’s next meeting in March, with the FOMC writing that “the committee anticipates that ongoing increases in the target range will be appropriate…”, with “ongoing” being the key to suggesting another hike in March. 

The Fed’s current dot plot shows inflation peaking at 5-5.25%, which, going by the current rate of hikes, will see another one to two 25-bps hikes. However, all these are contingent on upcoming key inflation reports in the U.S., including the CPI and PPI reports, released 14 and 16 Feb.

Investors are now advised to look out for January’s Nonfarm Payrolls, which will be released on 3 January 2023, at 15:30 (GMT+2) and is forecast to be at 185K, down from November’s 223K. The NFP is one of the key labour statistics for the U.S, and its outcome will play a part in determining further Fed policy. 

As a  friendly reminder, do keep an eye on market changes, control your positions, and manage your risk well.

把握优势,开始交易

以行业低点差和闪电般的执行速度交易外汇、指数、贵金属等。

  • 在我们的Standard账户上以最低50美元的入金金额开始交易。
  • 获得全天候支持。
  • 获取数百种交易工具、免费教学器材和最佳的优惠活动。
立即加入

Latest Posts

简单快速的
开设账户

开设真实账户
  • 1

    即刻申请

    通过无障碍程序注册

    PU Prime

    真实账户

  • 2

    轻松入金

    通过多种渠道及可接受的货币轻松地为您的账户入金

  • 3

    开始交易

    在市场领先的交易条件下,交易数百种产品