Federal Reserve leaves rates unchanged. Won't cut until has confidence on inflation fall

<ul><li>Prior was 5.25-5.50%</li><li>Recent indicators suggest that economic activity has been expanding at a solid pace</li><li>Removes reference to 'additional policy firming'</li><li>The Committee does not expect it will be appropriate to reduce the
target range until it has gained greater confidence that inflation is
moving sustainably toward 2 percent.</li><li>Inflation has eased over the past year but remains elevated.</li><li>Entire paragraph about banking system and tighter financial conditions removed</li><li>Says risks to employment and inflation goals are "moving into better balance"</li></ul><p>So the main line about a hiking bias was removed but it was replaced with a pushback against cutting too soon. Now Powell will be asked about what it will take to get 'great confidence" that inflation is sustainably headed to 2%.</p><p>On net, I take this as a bit hawkish as it seems to be a direct pushback against a March cut, which was 62% priced in before the statement was released. The US dollar is 20-30 pips higher across the board and stocks are at the lows of the day.</p><p>Overall, the statement was almost completely re-written.</p>

This article was written by Adam Button at www.forexlive.com.