Fed Chair Yellen’s Statement

The Fed decision was to keep rates on hold and reducing their asset purchasing programme to $10B from $15B. Fed Chair Yellen has explained that inflation has tightened since the start of the year and she see’s it moving towards the comity’s target of 2%. Rates will be increased in line with the performance of the economy and whether forecasts are met in respect of inflation and maximum employment.

We saw movement in most USD crosses. Most notably EURUSD broke below 1.29 and is currently at 1.2880, USDJPY hit a 6 year high of 108.29 and USDCHF is up 70 pips to 0.9400. AUDUSD 100 pips lower from 0.9070 to 0.8970 and GBPUSD down to 1.6250 ahead of tomorrow’s Scottish vote for independence.

Yellen explained that uncertainty still exists and when it comes to the funds rates. and the situation will depend on how the economy evolves. Fed sees GDP growth of 2.3% – 2.5% in 2017 and overall economy is continuing to make progress towards set goals. However the Fed has the flexibility to move faster if economy warrants.