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🎯 Fed Minutes: Reading Closely, Looking for New Targets ⠀
🚀 Federal Reserve confirmed accelerating the pace of the QE cut to complete the program in March. The rate trajectory forecast assumes three rate hikes (0.25% each) in 2022. We need to understand what surprises to expect from the next meeting (January 26), although usually, Fed does not make serious decisions at the beginning of year.
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In the text of protocol, we are looking for answers to several questions:• What is «maximum employment» from the point of view of Fed?
• Will Fed wait for maximum employment before raising rates?
• Is the 4.0% unemployment rate sufficient without increasing labour force participation, or are additional factors needed?
• Will strong inflation (without positive on employment) force rates to rise?
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Judging by the situation with Omicron COVID strain, the chance of a rate hike at the meeting on March 16 is minimal. The protocol may contain indicative deadlines for rate adjustments.
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The discussion between FRS members will allow assessing the margin of patients in situation of growing inflation and problems associated with the pandemic. In addition, a month ago Biden promised to announce the names of new members of Fed's leadership, but now there is almost no time left for reflection − by the end of January, FRS should be submitted to Senate for a vote.
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Let us remind you that the fall in the dollar at end of year was caused by seasonal factors, return of liquidity in markets will lead to the restoration of long positions in dollar. So let's be careful and don't risk in vain.
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Profits to y’all!