The US Federal Reserve had a monetary policy meeting but was unable to impress investors. Powell formalized in the statement the latest framework shift to an average inflation target.
Fresh forecasts showed that the FOMC expects the GDP to contract by 3.7% at a softer pace than the previous forecast of 6.5% in 2020 and sees unemployment at 7.6% at year’s end, compared to 9.3% in June projection.
Fed fund rates are seen unchanged for this year and the next ones, while inflation was downwardly revised for this year to 1.0% from 1.5%. US policymakers are open to adjusting the monetary policy further as needed but suggested they will remain on pause for now.
The dollar advanced modestly at the end of the day, but there were no notable developments across the board, except for EUR/USD which fell below 1.1800.
GBP/USD surged to 1.3000 and finished the day around 1.2960, on reports the UK offered tentative concessions on fisheries in trade talks with the EU, one of the main issues blocking negotiations in the last months. Pound bulls ignored the Fed.
The focus shifts now to the BOE monetary policy announcement early Thursday.