Fed Keeps Rate Unchanged, Traders Wait For Powell’s Comments

Key Insights

• Federal Reserve kept the federal funds rate at 5.25% – 5.50%.
• Fed noted that economic activity was strong in the third quarter. 
• The initial market reaction shows that traders are no ready for big moves ahead of Powell’s press conference. 

On November 1, Fed released its FOMC Statement. The Committee decided to maintain the target range for the federal funds rate at 5.25% – 5.50%, in line with analyst estimates.

Fed noted that job gains have moderated since earlier in the year, but inflation remained elevated. The central bank also noted that economic activity expanded at a strong pace in the third quarter.

All in all, the FOMC Statement contained no surprises. The strong growth of the economic activity in the third quarter provides Fed with a chance to deliver another rate hike this year, but it remains to be seen whether Powell believes that it’s a good idea.

The FOMC Statement is brief as usual, so traders will have to wait for Powell’s press conference for additional clues on Fed policy.

U.S. Dollar Index pulled back below the 107 level after the release of FOMC Statement. However, the situation may change quickly during Powell’s press conference.

Gold remains stuck in the $1975 – $1985 range. Treasury yields continue to move lower, but it looks that demand for safe-haven assets has declined, which is bearish for gold.

SP500 showed little reaction to FOMC Statement. Most likely, SP500 will be more sensitive to Powell’s comments.

For a look at all of today’s economic events, check out our economic calendar.