Urgent US Federal Reserve Decision
1. Roadmap for 2026 (Dot Plot)
The Federal Reserve issued an update to its members' interest rate forecasts, and the tone was more cautious than optimistic:
Slower pace: Most members expect to reduce interest rates by only 50 to 75 basis points over the entire year of 2026.
Meaning: This means we might see only two or three reductions spread over the coming year, not at every meeting as happened recently.
Final target: The Fed sees that interest rates will eventually stabilize (end of 2026 or beginning of 2027) at a level of 2.75% - 3.00%, which they consider the "neutral level" that neither harms nor benefits the economy.
2. Market Reaction (the market reads between the lines)
Due to the presence of 3 dissenting members (who believe rates should be held steady and not lowered), markets reacted cautiously:
US Dollar: Rose slightly. The reason is that the division within the Fed means that the upcoming cut is not guaranteed, keeping the dollar attractive as a savings vehicle for a longer period.
Gold: Experienced volatility and a downward trend. Gold dislikes high interest rates, and the Fed's tone indicating "patience" in 2026 made investors take profits.
Stocks: Companies are happy with the current cut, but they are worried that 2026 won't bring many inexpensive "gifts" (cuts) for lending.
