Fed Pauses at 3.50–3.75%, Steering Clear of Explicit Guidance

In line with the broad market expectations, the US Fed left the fed funds rates unchanged at 3.50-3.75% after the Jul-26 FOMC meeting.

However, 3 out of the 12 policymakers voted for a +25bps hike, indicating some of the FOMC members preferred Fed to tighten its monetary policy.

Fed pause

In the brief FOMC statement, the assessment on the labour market was mainly unchanged, with the US economic activity is growing at a “solid pace” despite the growing uncertainty in the Middle East.

Hawkish policy

“We foresee a still hawkish policy path for the Fed, incorporating the distinct possibility of one rate hike later this year. This prospective tightening reflects an effort to keep elevated price pressures in check, particularly as fresh volatility in the oil market threatens the disinflation outlook,” says MBSB.

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