Due to comments by the Federal Reserve’s Charles Evans signifying there will be no change in interest rates for over a year, the dollar plunged and then traded sideways on Tuesday.
Interest rates staying where they are until the autumn of 2020 would make the President of the Chicago Fed Evans comfortable stated in a news report. After slipping in the recent months, it is something he believed that would support in ensuring that inflation returns to the Fed’s target rate of 2%.
Evans said, “I can see the funds rate being flat or unchanged into the fall of 2020. For me that’s to help support the inflation outlook and make sure that its sustainable at 2% or a little above.”
The easy policy stance adopted by the Fed was unsuccessful and did not cause any significant weakening of the dollar. It was because abandoning plans for higher interest rates were followed by many other banks.
The latest central bank to move towards an easier monetary policy overnight was the Reserve Bank of Australia. A decrease in the cash rate would likely be appropriate if inflation didn’t rise from its current levels and if joblessness began to escalate.
The cash rate since a 25-basis point cut to 1.50% in August 2016 has not been touched by the RBA.
In a news report, the dollar strengthened 0.4% versus the Aussie. Meanwhile, the greenback, which is measured by the dollar index against a basket of major currencies, was weak at 96.555. The euro has been untouched at $1.1307 and the British pound reduced at $1.3090
In the recent weeks, the European Central Bank, the Bank of England, and the Reserve Bank of New Zealand moves was followed by the RBA.
On Tuesday, the global data calendar showed heavy data. In stopping the slowdown in the global economy, opportunities presented are plenty in terms of gauging the success of central banks.
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