The Fed delivers its 4th rate hike no matter what Trump said

Chris L
Category:  Financial News
The Federal Reserve announced a new rate hike in its December 19 FOMC meeting according to a press release published by the bank. The Fed also highlighted risks, but it kept a balanced outlook. 

The FOMC increase its interest rate from 2.25% to 2.50%, a decision in line with market expectations. 

After dismissing political pressures from the White House, including a tweet from the United States President Donald Trump, the Fed delivered its fourth rate hike in 2018 and hinted two more increases in 2019. 

Trump's tweet said: "I hope the people over at the Fed will read today’s Wall Street Journal Editorial before they make yet another mistake. Also, don’t let the market become any more illiquid than it already is. Stop with the 50 B’s. Feel the market, don’t just go by meaningless numbers. Good luck!"

Fed's chairman, on his side, commented about political pressures that "nothing will deter us from doing the right thing."

Federal Reserve announces rate hike, defying pressure from President Trump but in line with analysts that see the announcement as an indicator that the economy is well enough to afford six interest rate hikes in two years. 

According to the statement, the Fed sees job market strong, household spending growing strongly and a moderated business fixed investment. 

"On a 12-month basis, both overall inflation and inflation for items other than food and energy remain near 2 per cent. Indicators of longer-term inflation expectations are little changed, on balance."

Wall Street falls hard after Fed rate hike


The Dow Jones Industrial Average is suffering a triple-digit drop following the Fed's decision. Same story with the S&P 500 and the Nasdaq Composite, falling strong. 

The market reacted badly after the Fed's hike as they are assuming there will be less liquidity in market with the decision. 

The DJIA is falling 1.50% or 351 points to 23,323.66; The S&P 500 is currently 1.54% down to 2,506.96; while the NASDAQ Composite is declining 2.17%, or 147 points to 6,636.82. 

Dollar up after Fed's decision




The Dollar is reverting all its previous daily losses against the Euro following the Federal Reserve decision to hike rates. The EUR/USD fell from 1.1440 pre-decision to test daily lows around 1.1360. The pair is now 0.08% positive around 1.1369. 

Same story with the GBP/USD, which is now trading down around 1.2605, after falling 80 pips from 1.2680. The Pound is 0.18% negative in the day versus the dollar. 
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