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Fed Interest Rate Decision – United States

Fed Interest Rate Decision - United States

The Federal Open Market Committee (FOMC) members will vote tomorrow on where to set the US interest rate, and the decision will be made public at 14:00 PM, through a press release. If at the last meeting the interest rate remained unchanged at 2.00 percent, just in line with the forecast; this month the Federal Reserve is expected to raise interest rates another quarter percent.

The Fed’s Interest Rate Decision – forecast indicates a raise in September

The annual inflation rate in the United States fell to 2.7 percent in August, below market expectations of 2.8 percent. In addition, the unemployment rate remained unchanged at 2.9 percent, above market expectations of 3.8 percent; and the Consumer Price Index (CPI) in the United States increased to 251.85 index points.

The members of the board expressed a positive stance regarding the American economy, an attitude found in the latest Beige Book release, as well, where it was stated that even if at a slower pace, most economic factors are growing.

Overall, the Federal Reserve Bank board is widely expected to raise rates 25 basis point tomorrow. If their decision will be in line with the forecasts, that would be the eighth increase since December 2015.

An interest rate change always makes the Forex market move

Every forex trader should know that a changed interest rate, especially a raise, will affect the currency value and ultimately make the forex market move. Since we’re talking about the US dollar, a major currency, if the Federal Open Market Committee (FOMC) decides to hike the interest rates tomorrow, this event will make the entire forex market react.

At the moment, the US dollar is higher against all major currencies, except the Japanese yen (JPY) and the British pound (GBP). In spite of the current political tensions with China, the Central Bank is known for sticking solely to the US economic data; which would be a great opportunity for forex traders to understand and evaluate the US economic developments.

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