Stability observed in the US dollar following predicted decrease in interest rate for the US currency
The Federal Reserve (Fed) recently held a meeting following the confirmation of Stephen Moore as a Fed governor, but did not make a 50 basis point rate cut decision as some had anticipated.
Stephen Moore, an economic advisor to the White House, was confirmed by the US Senate for the Fed governor position on Monday evening. However, he was the only member of the committee advocating for a significant rate cut of 50 basis points. The Fed, instead, opted for a 25 basis point cut.
Thomas Gitzel, of VP Bank, forecasts that the Fed will make two more rate cuts totaling 50 basis points by 2025. According to Gitzel, it is expected that the interest rate will be reduced by 25 basis points at each of the remaining two meetings.
The Fed's focus has shifted from inflation to the labor market, a complex task due to a weakening labor market and persistent high inflation, as stated by Carlos de Sousa, portfolio manager at Bank Vontobel.
The EUR/USD slipped to 1.1836 by evening, while the EUR/CHF remains nearly unchanged at 0.9334. The USD/CHF pair dropped to 0.7850 as a result of the Fed's interest rate decision.
The composition of the Open Market Committee now includes three members with ties to the Trump administration. The Trump-affiliated faction within the Open Market Committee has grown to three members, with Stephen I. Miran, a Trump-appointed member, joining Christopher J. Waller and Michelle Bowman, who were previously considered close to that faction.
Fed Chair Powell reiterated the central bank's unchanged political independence during the meeting, addressing concerns about potential political influence.
The pressure to further cut rates will add to the challenge, according to Carlos de Sousa. The confirmation of Stephen Moore as a Fed governor did not result in a 50 basis point rate cut decision by the committee, but it has certainly added a new perspective to the discussions within the Fed.
Read also:
- Trade Disputes Escalate: Trump Imposes Tariffs, India Retaliates; threatened boycott ranges from McDonald's, Coca-Cola to iPhones
- Aquatech purchases Koch's Direct Lithium Extraction business, merging Li-ProTM DLE technology into the PEARLTM Technology Platform.
- Nepal's Journey: Evolution from Street Life to Political Power
- Li Auto faces scrutiny after crash test involving i8 model and a truck manufacturer sparks controversy
