Interest Rates Held Steady
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In the currency market, the dollar slipped against the euro. Late Wednesday, the euro was trading at $1.5683 vs. $1.558 on Tuesday.
In holding interest rates steady, to no one’s surprise, the FOMC said that “although downside risks to growth remain, they appear to have diminished somewhat, and the upside risks to inflation and inflation expectations have increased.”
That wasn’t enough for many analysts. “People were looking for a more hawkish tone,” said Don Alexander, director of fixed income at Citigroup (NYSE: C) Global Wealth Management. “Until the end of the year, it’s pretty much steady as she goes with [interest] rates.”
But some think that the jury is still out.
“The Federal Reserve has time on their side at this point because the next fed meetings aren’t until August,” said Kathy Lien, chief strategist at DailyFX.com.
“There’s a lot of data that will be released from now until then,” she added. “Time is on their side, which is why rate hike expectations could change dramatically over the next few weeks.”
The euro also got support from comments by European Central Bank President Jean-Claude Trichet.
Trichet told a European Parliament committee meeting that the threat of a wage-price spiral is “acute” and reiterated that his opinion following the ECB’s June meeting — in which he stated that the bank’s 4% key interest rate could see a “small” increase — hadn’t changed
Source: Interest Rates Held Steady
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