With the 25 basis point interest rate hike decision announced yesterday, the FED took the interest rates to the highest level of 22 years at 5.5%.
The rate hike decision was in line with expectations and there was no significant change in the text. Afterwards, investors who were locked in Powell's statements faced the “bear or bull” dilemma between the old wolf's superior communication skills.
Analysts, evaluating Powell's statements, stated that there are messages for both bears and bulls.
While the FED chairman stated that they would decide from meeting to meeting according to the data, he softened his statement of “two interest rate hikes” announced in June. “There may or may not be another rate hike,” said Powell's approach, which was interpreted as more dovish than June, and the bulls clung to this statement.
Powell's comment that it takes some patience to see the effect of rate hikes also supported the view that “this was the last rate hike”.
While these comments gave encouragement to the bulls, there were some signals for the bears as well.
The bears were encouraged by the fact that the FED was not comfortable with interest rate cuts this year or even next year, and that the monetary policy was not restrictive enough for a long time.
Powell's communication language, which did not want to upset or encourage the markets, left investors hesitant again. This was interpreted as the fluctuation in the stock markets will continue in the upcoming period.
After Powell's statements, DXY's decline from 101.3 levels to 100.3 shows that positive statements are bought for now, while Bitcoin's falling below $30,000 indicates that the risk appetite is low on the cryptocurrencies side and that Powell's statements are being digested.