Dollar steady after Fed hold leaves rate path murky
TLT•The dollar steadied after the Federal Reserve held rates in a 10-2 decision, leaving investors uncertain about the outlook. Traders pared bets on 2027 rate hikes, while the ECB and Bank of Japan meetings came into focus.
1. Fed decision leaves outlook unclear
The dollar steadied after the Federal Reserve held interest rates as expected and said upcoming inflation data would influence future policy moves. The Fed described the economy as growing at a “strong pace” and delayed changes to borrowing costs until after next week’s midterm election.
2. Traders pare hike wagers
Fed Chair Kevin Warsh’s press conference offered no clear steer on a December move, and traders reined in bets on rate hikes in 2027. Markets were pricing in a 78% chance of a December hike. The dollar index stood at 102.26, while the two-year Treasury yield was last down 2.3 basis points at 4.712%.
3. Central bank decisions ahead
Attention shifted to the European Central Bank, which was due to announce its decision later Thursday, and the Bank of Japan, which was set to conclude its meeting Friday. Both were expected to leave rates unchanged. The Bank of Canada raised its policy rate for the first time in more than three years, saying further increases might be needed to curb inflation from rising energy costs.
