• Fed leaves rates unchanged, sees inflation rising this year
The U.S. Federal Reserve kept interest rates unchanged on Wednesday but said inflation likely would rise this year, bolstering expectations borrowing costs will continue to climb under incoming central bank chief Jerome Powell.
Citing solid gains in employment, household spending and capital investment, the Fed said it expected the economy to expand at a moderate pace and the labor market to remain strong in 2018.
“Inflation on a 12-month basis is expected to move up this year and to stabilize” around the Fed’s 2 percent target over the medium term, the central bank said in a statement following a two-day policy meeting, the last under Fed Chair Janet Yellen.
It also said its rate-setting committee had unanimously selected Powell to succeed Yellen, effective Feb. 3. Powell, a Fed governor who has worked closely with Yellen, was nominated by President Donald Trump and confirmed by the U.S. Senate.
• The U.S. dollar was lower on Wednesday ahead of a Federal Reserve policy announcement that was widely expected to leave interest rates unchanged but nod to the strengthening economy, while the euro rose on firm underlying euro zone inflation data.
Against a basket of six currencies, the greenback was down 0.35 percent to 88.846 at 10:23 a.m. ET (1524 GMT), putting it on track to fall nearly3.5 percent in January, its biggest monthly drop since March 2016.
The ADP Research Institute said on Wednesday that U.S. private employers added 234,000 workers in January, more than the 185,000 forecast among analysts polled by Reuters. The data did not significantly impact the dollar after it was released.
Meanwhile, U.S. President Donald Trump’s first State of the Union address on Tuesday night failed to offer any comfort to dollar bulls.
Trump called on the U.S. Congress to pass legislation to ensure at least $1.5 trillion in new infrastructure spending and urged lawmakers to work toward bipartisan compromises, but he pushed a hard line on immigration.
• The euro last climbed 0.49 percent to $1.2461 on Wednesday and was on track for its biggest monthly rise in nearly two years as firm underlying euro zone inflation data for January kept expectations alive for a swift withdrawal of the central bank’s stimulus policies.
Underlying inflation, excluding food and energy, - a key measure studied to gauge price pressures in the 19-bloc zone - accelerated to 1.2 percent in January from 1.1 percent a month earlier but broader price gauges slowed.
• The U.S. dollar turned positive on Wednesday after the Federal Reserve left interest rates unchanged but said it expected inflation to rise this year, while the euro turned negative and last hovered near flat.
Against a basket of six currencies .DXY, the greenback was up 0.04 percent at 89.192 at 2:55 p.m. ET (1955 GMT). The dollar was still on track to fall more than 3 percent in January, its biggest monthly drop since March 2016.
The euro EUR= turned negative and hovered near flat after the Fed statement, last rising 0.02 percent to $1.2403.
• The U.S. Treasury said on Wednesday it planned to hold larger debt auctions because of the winding down of the Federal Reserve’s bond-buying program, but warned it would only be able to pay all of the federal government’s bills through February.
• U.S. Treasury Secretary Steven Mnuchin on Wednesday called on the Republican-controlled Congress to lift the federal debt limit “as soon as possible” so the government can pay employee benefits and other obligations.
In a letter to congressional leaders and key committee chairmen, Mnuchin said the Treasury Department would continue to suspend payments into federal employee retiree, health and disability funds through Feb. 28.
• The FBI said on Wednesday it had “grave concerns” about the accuracy of a top-secret House Intelligence Committee memo alleging anti-Trump bias within the Justice Department, challenging President Donald Trump’s pledge to release it.
• U.S. Representative Trey Gowdy, chairman of the powerful House Oversight committee, will not run for re-election this November, he announced on Wednesday, becoming the latest high-profile Republican to retire from Congress.
“I will not be filing for re-election to Congress nor seeking any other political or elected office,” he said in a statement. “Whatever skills I may have are better utilized in a courtroom than in Congress, and I enjoy our justice system more than our political system.”
• U.S. President Donald Trump’s re-election campaign ended 2017 with $22 million in cash helped by $6.9 million in contributions in the fourth quarter of the year, his campaign announced on Wednesday.
• European Union negotiators see no room for discussion with Britain on maintaining “passport” access to EU financial markets for its banks after Brexit, but they are willing to look at free trade in the sector, diplomats said.
• Oil prices rebounded from earlier losses to end higher on Wednesday, after the U.S. Energy Department said oil inventories rose for the first time in nearly three months, but was offset by strong demand for gasoline and distillate products and news that OPEC countries maintained heavy supply cuts in January.
U.S. crude futures settled up 23 cents to $64.73 a barrel, a up 0.4 percent, after hitting a low of $63.92 shortly after the release. Brent crude rose 3 cents to $69.05 a barrel.
Reference: Reuters
Thai
Eng