The U.S. Federal Reserve increased its target range for the fed funds rate by 25 base points yesterday. The Fed Chair Yellen indicated that the central bank is on the path of policy tightening, and it will increase its policy rate gradually.
However, she underline that the further rate hike would be based on incoming data . That indicates performance of the key indicators like economic and inflation outlook will determine the further rate hike.
"The likelihood of a rate step would rise if inflation was to increase over the coming months - but only if the US dollar did not appreciate too notably at the same time. Against this background we therefore urge caution against simply jumping onto the band wagon in case of stronger USD appreciation", says Commerzbank in a research note.