Published May 6, 2022 5:30 am est
by Richard F. Cason, 
NewsMovesmarketsForex
Currency Analyst
Key Take away’s-
- FOMC Raised the interest rate target by .50 basis point to to 1.00 percent
- FED decides to Reduce the size of Balance Sheet, Reduction of Security Holdings
- Inflation at a record 40 Year High of 8.5 Percent
- US Dollar Index Trading at 103.49 Down -0.25 Percent in Early morning U.S. Trading Session
- Unemployment for Black Americans and Hispanics improvement moderately
- Labor Market Imbalanced, resulting employers Having Serious Significate Trouble filling Job Vacancies
The Federal Open Market Committee met in Washington, DC. lead by the honorable Jerome Powell who released the FOMC monetary policy statement on May 04, 2022.
The Committee officially agreed to raise its policy interest rate by .50 basis points to 1.00 percent, and anticipates on going increases in rate for the federal funds rate will be appropriate. The Fed also decided to reduce the Balance Sheet starting with Treasury Securities, the Cap will be 30 Billion a Month for three months, then increase the amount to 60 Billion per month, as well as Agency Mortgage Backed Securities Cap 17.5 Billion per month for three months, and then increase to 35 Billion per month.
FED Chair Powell Addresses The American People Directly, Acknowledges inflation is to High
Chairman Powell set the Tone early by addressing the American people directly stating, “Inflation is much to high and we understand the Hardship that it is causing and we are moving expeditiously to bring it back down we have both the tools we need and the resolve it will take to restore price stability on behave of the American families and business. The economy and the country has been through a lot over the past two years and proved resilient it is essential that we bring inflation if we are to have a sustained period of strong labor market conditions that benefit all.
U.S. Economic and Labor Market Developments
Chairman Powell provides further context regarding the the state of the Economy and Labor market developments said that, “After expanding at a robust five and a half percent pace last year overall economic activity edge down first quarter over underlying momentum remains strong; however as the decline largely reflects reflected swings in inventories and net exports two volatile categories whose movements last quarter likely carry little signal for future growth.
Indeed household spending and business fixed investment continued to expand briskly the labor market has continued to strengthen and is extremely tight over the first three months of the year. Employment rose by 1.7 million jobs in march. the unemployment rate hit a post pandemic and near five decade low of 3.6 percent.
Improvements in labor market conditions have been widespread including for workers at the lower end of the wage distribution as well as for Black Americans and Hispanics.
The labor demand is very strong and while labor force participation has increase somewhat labor supply has remain subdued. Employers are having trouble filling job openings and wages are rising at the fastest pace in many years inflation remains well above are longer goal of 2 percent.
Over the 12 months ending in march total PCE prices rose 6.6 percent, excluding the volatile food and energy categories core PCE prices rose 5.2 percent.
Aggregate demand is strong and bottlenecks supply constraints are limited how quickly production can respond disruptions to supply have been larger and lasting longer than anticipated and prices pressures have spread to broader range of goods and services the surge in prices and crude oil and other commodities that resulted in Russia invasion of Ukraine is creating addition upward pressure on inflation.
COVID related lock down in China are likely to further exacerbate supply chains disruptions as well Russia invasion of Ukraine is causing tremendous loss and hardship. Our thoughts and sympathies are with the people of Ukraine.
Global Currency Markets
The Dollar Index is Trading down this U.S. early morning session at 103.47 down -0.25 percent. As the highly anticipated Non Farm Payrolls Labor market report is only and hour away the currency markets are mostly trading down with the AUDUSD trading at spot .7094 down -0.24 percent, USDCAD trading at spot 1.2832 down -.01 percent, NZDUSD trading at spot .6424 up .06 percent, EURUSD trading at spot 1.590 up .48 percent.
CENTRAL BANKS LASTEST DEVELOPING STORIES
As global inflation is on the rise and trader sentiments are anticipating erratic Currency Price Fluctuation in FX global markets be sure to stay current on the developing Central Bank News Developments catch the latest story on The Reserve Bank of Australia 2022 rate hike, Reserve Bank of Australia hikes Interest rates to .35 percent, while Inflation Turns UP.
