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Federal Reserve · Interest Rates · Monetary Policy · US Dollar
The Federal Reserve, under new Chair Kevin Warsh, maintained interest rates at 3.50%-3.75% but adopted a hawkish stance by signaling a potential rate hike this year, causing the US Dollar Index to surge toward 100.40.
The Fed removed its previous reference to “additional rate adjustments” from the statement, a shift markets interpreted as a move toward a more cautious, data-dependent policy. Fed policymakers now project US Gross Domestic Product (GDP) growth at 2.2% in 2026, down from the 2.4% projected in March, while the median federal funds rate projection for the end of 2026 rose to 3.8% from 3.4%.
The US Dollar strengthened significantly against all major currencies, with EUR/USD falling to an eight-week low near 1.1500 and GBP/USD hitting a two-month low near 1.3270. USD/JPY skyrocketed near a two-year high at 160.80.
Gold prices dropped sharply near $4,240 as the US Dollar surged and US yields rose, despite geopolitical uncertainty. West Texas Intermediate (WTI) Oil prices remained neutral near $75.40 per barrel, influenced by expectations of increased Middle East supply following a US-Iran ceasefire framework deal, though geopolitical risks persist.
