Yesterday the Federal Reserve followed through on economists’ expectations and increased the interest rates in the United States by .25% from 1.5 to 1.75%. This was highly anticipated and possibly capable of supporting the American dollar, but that did not happen.
The Federal Reserve in general seemed to have a positive outlook for the US economy. They revised their economic growth forecast upward, as low unemployment rates and wage growth have been consistent in recent reports. However, it was also expected that based on this the Federal Reserve would also announce that instead of three it would have four rate hikes in 2018. Instead, they kept the original number of increases in place.
The central bank also expressed a concern over a global trade war. Since President Trump wants to impose tariffs on China (on top of the tariffs on steel and aluminum already proposed), fears of a new round of international lack of cooperation and even retaliation against the US from its biggest trade partners could harm the economy and slow down economic growth.
The big winners were the euro and the Japanese yen, which both made gains since the announcement.
