Thursday, July 29

FED Announces Its Interest Rate Decision

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FED 1

The Fed has announced its long-awaited interest rate decision.

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The Federal Open Market Committee (FOMC) did not make any changes in interest rates and announced that it kept the interest rate constant in the range of 0% – 0.25%.

FED members predicted two rate hikes until 2023 on the dot chart. While the number of members expecting an increase in 2023 was 7 out of 18 members, this time the number increased to 13.

US stock markets fell after the decision. Dollar/TL, which was in the 8.50 band, rose above 8.55.

US Federal Reserve Chairman Jerome Powell said in a statement after the meeting that “asset purchases will continue until significant progress is made”.

Powell also used the following statements:

“The sectors most affected by the COVID-19 outbreak have shown some improvement. There is also an improvement in economic activities and employment indicators. Most of the rapid growth that has taken place indicates the exit from the crisis. The risks regarding the economic outlook continue. Inflation has increased significantly in recent months. The residual inflation experienced partially reflects the base effects.

The supply bottleneck was larger than expected. Inflation may be higher than expected and permanent. We expect inflation to hover above 2% for a while.”

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