The USD/JPY retreated on Wednesday after the Federal Reserve's decision to keep interest rates unchanged while tilting slightly hawkish as Fed officials upward revised the federal fund's rates.
Fed maintains interest rates; projects higher rates through 2024 with a federal funds rate adjustment to 5.10%. Cooler US inflation report pressures the Greenback, leading to a decline in USD/JPY. Fed's economic outlook: Stable growth at 2.1%, steady unemployment at 4%, with minor hikes in PCE and Core PCE inflation rates.
Meanwhile, the Summary of Economic Projections revealed that policymakers tilted slightly hawkish, as the median foresees the federal funds rate to end at 5.10% in 2024, up from 4.60% in March’s projections. The economy is expected to grow 2.1%, consistent with their March forecast, while the unemployment rate is projected to remain at 4%, unchanged from the previous SEP. PCE inflation is expected to rise slightly from 2.4% to 2.6%, and Core PCE inflation is projected to increase from 2.6% to 2.
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