No one expected the Fed to make such a move. Overview for 04.03.2020
Last night, the major currency pair updated this year’s highs after the Fed’s decision to cut the rate.
Yesterday evening, EURUSD reached the highest levels since January 2nd, influenced by an unexpected decision from the Fed. Today, investors are slowly calming down, but the global rate cut process has already started. The current quote for the instrument is 1.1160.
The US Federal Reserve had an emergency meeting yesterday and shocked everybody by cutting its benchmark rate by 50 basis points at once down to 1.00-1.25%. as they say, the decision was made unanimously in order to address the consequences of the global outbreak of the Chinese coronavirus for the American economy.
Of course, market players were expecting the rate to be cut, but during the Fed’s scheduled meeting on March 17th and 18th.
It would seem that the decision has something to do with pressure from the White House and Donald Trump personally.
The last time the Fed did something like that, I mean making rate decisions without any warnings, was in 2008. However, at that time, the economic climate couldn’t wait. It is very interesting what exactly Powell and his colleagues saw in their country’s economy that made them take such preventive actions?
In fact, the Fed, instead of calming market players down, provided them with a very clear signal that everything might be much worse than expected. Indeed, if the regulator decided to make such a move, it meant that the situation really needed it. On the other hand, the statistics show that the American economy is pretty stable and has nothing to worry about.