FOMC Trims 25-bp, USD, JPY Buoyed

The FOMC, as largely anticipated, cut its benchmark lending rate by 25-basis points to 4.25% while also lowering the discount rate by 25-basis points to 4.75%. Given the reaction by the US equity bourses, markets were hoping for either a more aggressive ease or language from the Fed. The yen strengthened across the board following the decision, rallying on its inverse correlation with equities.

The accompanying Fed statement reiterated slowing economic growth due to “intensification of the housing correction with some softening in business and consumer spending”. However, the FOMC continued to highlight concerns over lingering inflationary pressure – saying “readings on core inflation have improved modestly, but elevated energy and commodity prices may put upward pressure on inflation”.
read more:FOMC Trims 25-bp, USD, JPY Buoyed

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