At the latest Fed meeting, Chairman Jerome Powell announced a 0.50% increase in interest rates, which sets the range from 0.75% to 1.00%. He also noted a reduction in the balance sheet by $47.5 billion a month starting in June, when the sale of government bonds for $9 trillion will start. He also said that the US economy fell in the first quarter, but is still strong, and that in the fight against inflation, there are tools to bring it down to the target level of 2.0%. Powell claims that there is a possibility of a soft landing as the economy is far from recession.
US stock began indices to decline amid these statements, but it did not last long as growth occurred after Powell said the committee is not considering a more aggressive rate hike at the next meetings. This means that if the Fed does not take a break in raising rates at the June meeting, rates will go back to 0.25%.
Of course, markets could not but react to this news, especially since the Fed made it clear that they will do everything to lower inflation. The stock market soared up, as earlier investors were pawning on the promising, aggressive policy of the central bank.
As for statistics, the US will release its employment data for April, which is expected to show a 391,000 increase in jobs last month, from a March value of 426,000. Given the current mood of the Fed and possible weakness in the labor market, demand for the dollar will continue to decline, while stocks and other commodity assets will rise. .