Paraguay Holds Interest Rate at 5.5% as Inflation Remains Stable Amid Global Uncertainty 
BOJ Governor Kazuo Ueda Hints at Rate Hike as Inflation Pressures Build 
RBA Raises Interest Rates to 4.35% Amid Rising Inflation Risks and Middle East Tensions 
Japan Inflation Expectations Rise as BOJ Rate Hike Timing Faces Uncertainty 
Bank of Korea Signals Potential Interest Rate Hikes as Inflation Remains Elevated 
Yesterday’s price action post FOMC announcement strongly suggest that the market is more focused and more concerned about the future actions of the European Central Bank (ECB) that the U.S. Federal Reserve.
Yesterday’s policy action, statements, and projections - all were very hawkish; Federal funds rate was increased by 25 basis points along with other rate benchmarks, Fed projected increased growth, higher inflation, lower unemployment, and higher Federal funds rate. Despite that, the U.S. dollar declined against all its major counterparts, especially the euro only after a brief rise. The euro immediately declined after the FOMC announcement from 1.179 against the USD to 1.172 area, but recovered grounds since then and is currently trading 1.183 area.
With Fed, the market is pretty clear that the Fed will hike twice more this year and thrice next year with a constant reduction in its balance sheet. But, with ECB, the market is not certain about the timing of the QE end, tapering projections, and interest rate projections. We believe that market is increasingly focused on the ECB meeting, which is today, as the current bond-buying program of €30 billion per month will expire in September this year.
