Federal Reserve Resolution Eagle Posture Dollar Index Significantly Higher

The US dollar index rose significantly on Wednesday (September 17th). The Fed's interest rate resolution released during the day and the subsequent Yellen speech showed hawkish stance. "The interest rate remained for quite a long time". The key statement was not cancelled as expected in the forward-looking guidance, and the Fed announced it.

Normalization principles and plans.

The Fed's resolution is as expected, and the QE policy is again reduced by $10 billion to $15 billion a month - Mortgage Backed Securities (MBS).

The scale is reduced by US $5 billion to US $5 billion a month, and the purchase of treasury bonds is reduced by 5 billion US dollars to US $10 billion per month.

FOMC released quarterly forecasts for the 17 policy makers on the economy and interest rates, and for the first time released its forecast for 2017, suggesting that the Fed's rate hike will be faster than it was in June.

The median of the policymakers is expected to be 1.375% at the end of next year, 1.125% in June, 2.875% at the end of 2016, 2.50% before 2017 and 3.75% in 2017.

It also reiterated that the US inflation rate was lower than the target, but the inflation expectations were stable. It will keep a close watch on this. It reiterated that when deciding how long the 0-0.25% federal funds rate would be maintained, it would assess the expected progress in achieving the 2% inflation target and full employment; reiterated that the US economy might expand moderately and the employment market would gradually improve, and the risks faced by the future would be "roughly balanced".

STEPHEN STANLEY, chief analyst of PIERPONT SECURITIES, said, "the most striking thing is the interest rate expectations of policymakers.

They want to remind the market that the expected rate of interest is too low.

The forecast for June raised a very clear message that interest rates will rise to a more normal level, and that by the end of 2017, it will surely return to a more normal level.

They are very satisfied with the first estimate of the interest rate that the market has digested.

They did not want to adjust the wording of the statement much.

Speaking of exit plan is basically consistent with what we saw in the minutes of last meeting.

This is a more modest path. The Fed will not shrink the balance sheet until 2017. "