USD: Uncertainty remains over Fed lift-off - MUFG

FXStreet (Delhi) – Lee Hardman, Currency Analyst at MUFG, suggests that by not raising rates in its September meet, US Fed has kept the uncertainity alive about the timing of the Fed lift-off.

Key Quotes

“The US dollar has weakened modestly following the latest FOMC meeting after the Fed maintained their key policy rate and signalled a more gradual path for monetary tightening ahead. The accompanying policy statement clearly revealed heightened concern that “recent global economic and financial developments may restrain economic activity somewhat and are likely to put further downward pressure on inflation in the near-term”.”

“The FOMC added as well that it is “monitoring developing abroad” with risks to the outlook for economic activity and the labour market seen as nearly balanced. In the accompanying press conference Fed Chair Yellen elaborated further stating that “constraints on exports are likely to persist” and that the “outlook abroad appears to have become more uncertain”.”

“She added as well that developments in China and emerging economy were a particular focus for the Fed. The Fed also signalled greater concern over the market-based measures of inflation expectations which were described in the statement as having “moved lower”.”