FOMC raises its benchmark rate by 75 basis points to 3.00%-3.25%, in line with market expectations. Policymakers downgrade their GDP estimates, while revising upwards the inflation outlook. The September dot-plot signals a more hawkish. tightening path.
Looking ahead, once markets reassess today’s events and realize the monetary policy environment will become increasingly hostile to the economy and speculative appetite, risk assets may resume their decline. That said, it wouldn’t be surprising if markets reverted lower in the coming days, as traders reload their short positions.Prior to the central bank's announcement, Fed funds futures were signaling a terminal rate of around 4.
Meanwhile, risk assets took a sharp turn to the downside, with the S&P 500 and Nasdaq 100 falling more than 0.5%. Bitcoin also slumped to trade flat, erasing a 3% advance, as traders rushed to trim speculative positions that could suffer in less accommodative environments.After two days of intense deliberations, the Federal Reserve concluded its September meeting this afternoon.
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