FOMC Monetary Policy Statement 07/27

The Federal Reserve expectedly left its key lending rate unchanged at a range of 0.25%-0.50%.

In its accompanying statement today, the Federal Reserve said that near-term risks to their economic outlook “have diminished”, that the labor market has strengthened since the bank’s June meeting and that consumer spending was growing “strongly”.  

The statement added that officials continue to keep an eye on international developments.

And while the statement once again emphasized that the economic conditions continue to warrant a very gradual approach to policy normalization, the overall tone of the report is improved from the bank’s last statement in June. Overall, the statement will keep alive (if not boost) hopes for a lending rate hike by December and may have opened the door ever so slightly to a possible hike as early as September.

As always, economic data will continue to drive expectations for the Fed. As such, next week’s payrolls report for July, will be very important in guiding the dollar and broader financial markets.  

There will be no post-meeting press conference at today’s meeting.

The dollar rose to session highs in choppy trade following the Fed’s statement.