Fed minutes show concerns over inflation
The Federal Open Market Committee minutes for the July meeting were released yesterday and indicate that officials are still concerned about inflation. The minutes read that "most participants continued to see significant upside risks to inflation, which could require further tightening of monetary policy."
July's meeting saw a 25-basis point increase to the 5.25-5.50% range, with all voting members opting for the hike. Nevertheless, two non-voting members preferred "leaving the target range…unchanged."
The minutes also suggest that future rate decisions will be based on incoming data. However, a feeling of "higher for longer" is becoming entrenched. The 10-year real rate continues to climb and is currently trending up. In turn, this is rippling through to other instruments. The higher borrowing costs are acting as a headwind to risk markets and gold, whilst providing a modicum of support for the dollar
Russell Shor
Senior Market Specialist
Russell Shor joined FXCM in October 2017 as a Senior Market Specialist. He is a certified FMVA® and has an Honours Degree in Economics from the University of South Africa. Russell is a full member of the Society of Technical Analysts in the United Kingdom. With over 20 years of financial markets experience, his analysis is of a high standard and quality.
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