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- 13 Apr 2023
- ICICIdirect Research
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FED RELEASES US FOMC MEETING MINUTES
News: US FOMC meeting minutes showed that most policymakers wanted to skip the rate hike at their meeting last month after the failure of two regional banks but concluded high inflation remained so dominant that they increased rate by 25 bps. According to minutes, "Several participants considered whether it would be appropriate to hold the target range steady at the meeting" and "Participants observed that inflation remained much too high and that the labour market remained too tight; as a result they anticipated that some additional policy firming may be appropriate". Minutes also said Fed staff forecast presented at the meeting anticipated a recession would start later this year due to banking sector turmoil. After the release the dollar slipped to 101.53 while US stocks declined. Yield on two year note, most sensitive to Fed policy expectations pared much of their earlier gains and slipped to 3.96%.
Views: The dollar is likely to face strong resistance near 103.80 and slip further till 100/99.00 levels in the coming days. We expect the dollar to remain under pressure in anticipation that US Fed would take a backseat and pause its rate hike cycle. Recent economic data from the US seems to signal that the economy has started to slow amid high borrowing cost.