US Dollar Boosted by Fed's Hawkish Pause

 | Sep 21, 2023 12:10AM ET

  • The Fed left interest rates unchanged as expected.
  • The median FOMC member expects one more rate hike this year and two cuts next year.
  • The US dollar is rallying in response to the “Hawkish Hold”

    • The Federal Reserve’s Federal Open Market Committee (FOMC) left interest rates unchanged in the 5.25%-5.50% range as expected.

    There were no meaningful changes to the Fed’s monetary policy statement.

    h2 FOMC Summary of Economic Projections (SEP)/h2

    The Fed’s updated economic forecasts showed a median projection for 2023 growth of 2.1% (from 1% in June). Fed officials also lowered their unemployment forecast.

    The infamous “Dot Plot” of future interest rate forecasts from the central bank showed 12 members expected one more interest rate hike this year while 7 expected to no change to interest rates.

    More significantly, the median Fed member now expects “only” two rate cuts next year, down from four at the previous meeting.