Last night the FED held the US interest rate at 0.5% for the 6th time in a row. This decision was largely predicted and a long way from the optimism of a few months ago, with the outlook for a number of rate hikes during 2016. The markets were hardly affected following the news, with the US Dollar seeing no major movements.
This decision heaped further pressure on the FED once again, with domestic conditions appearing to be more balanced and the global situation more controlled. However, with the statement from the Federal Open Market Committee was hawkish suggesting that 2016 could still see a raise in US interest rates, and three members of the 12 FOMC members voting against the decision, economists are suggesting that the FED may be coming to life.
During the Q&A session that followed Janet Yellen (Chairlady of the Federal Reserve) was asked questions about the comments from Donald Trump regarding the FED’s influences. US presidential candidate Trump has previously suggested that the FOMC had been compromised by politics instead of being impartial. Yellen made it very clear that was not the case.
The US Dollar has been strong against the Pound since the UK’s EU Referendum vote resulted in “Brexit”. However, with the US presidential election due this November, there is likely to be increased volatility in the GBP/USD exchange rate.