In yesterday’s (22/02/2023) release of the FED meeting minutes, the FOMC reiterated that further hikes in interest rates can be expected.

While the last hike in rates came with an optimistic outlook, it seems that inflation still remains well above the 2% target, due partially to labor markets that “remained very tight” and “contributed to continuing upward pressure on wages and prices.”

Though, as reported, many of the board members pushed for a 50 basis point rise in rates (1 basis point being 0.01%) that would show greater resolve in bringing down inflation,  in the end, the board agreed on a 0.25 percentage point rate increase instead. However, it was made clear that future hikes would be necessary in order to combat inflation, which has proven to be both resilient and stubborn.

The announcement which came as no surprise, had no major effect on the US Dollar, which remains strong, especially against the British Pound and the Euro, while the stock markets saw a plunge after the announcement.

Market analysts, however, expect volatility in the FOREX markets, concerning the USD later in the year, once inflation has fallen under control, and interest rates start dropping.

This could provide great market opportunities for traders who favor the dollar, which is expected to weaken significantly once these events take place.

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