09/20/2023 The US Federal Reserve kept the key rate at the level of 5.5%.
The decision is based on the latest August reporting data on the strong US economy, low unemployment (maintaining the July level of 3.8%) with continued growth in consumer prices (an increase of 3.7% year-on-year), which is more related to the increase in oil prices.
The Fed has made it clear that while inflation risks remain , relative to today's level, at least will not change in the near future.
Among other things, the Fed continues to reduce the global liquidity of the dollar, according to the plan announced last year. This is due to the refusal to reinvest funds received from expired Treasury securities. The peak values for the money returned from the system are USD 60 billion for government bonds and USD 35 billion for mortgage-backed securities.
Following the results of the Fed meeting, its head Jerome Powell announced his readiness to continue tightening monetary policy, if necessary.
The signal for investors is clear. Already over the past 2 days, the main stock indexes of the Dow Jones and the US 500 have shown a drop of up to 3%.
Under these conditions, investment preferences will gradually be given to American bonds instead of exchange-traded instruments, which will affect the price of the latter.
The times with the cheap dollar will most likely have to be postponed a bit.
The Fed keeps the rate and continues to reduce dollar liquidity - Something like that!
