FOMC minutes: Staff’s projections included a mild recession starting later this year
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The Federal Open Market Committee (FOMC) released the minutes of the March 21-22 meeting, spurring little action across the FX board. According to the document, staff’s projections included a “mild recession starting later this year, with a recovery over the subsequent two years”.
In March, the Federal Reserve (Fed) raised the key interest rates by 25 basis points to 4.75% – 5.0%, as expected amid banking turmoil. Since the meeting, banking concerns eased and inflation data released on Wednesday showed the Consumer Price Index slowed to 5% in March, the lowest since May 2021; however, the Core rate edged higher to 5.6%. The minutes showed that some Fed’s officials would have considered a 50 basis point rate hike in the absence of the developments in the banking sector.
The US Dollar remains at session lows, with the Dollar Index headed toward the lowest close since early February, down 0.65%. EUR/USD rose to test the 1.1000 area. US yields held steady, with the US 10-year around 3.43% and the 2-year slightly below 4%.
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