Investors cautious ahead of Fed rate decision

Watch the Fed's Press Conference Wednesday

Initial estimates put growth in France at 1.5 percent in 2018, a significant decline from the growth of 2.3 percent in 2017.

In a news conference announcing the decision, Federal Reserve Chair Jerome Powell said that the case for any additional rate hikes "has weakened".

The benchmark 10-year U.S. Treasury yield extended its decline to as far as 2.674 percent, its lowest since January 14.

Since then Chairman Powell and other Fed officials have emphasized their desire to be "patient" in their approach to rate hikes and their belief that there's no "pre-set course" for future increases. Over the past few months, that risk appears to have diminished.

US stocks jumped on Wednesday, as Apple led a rally in technology shares and Boeing boosted sentiment with an upbeat forecast ahead of the Federal Reserve's monetary policy decision.

European shares edged lower and the Dow fell on downbeat reports by DowDuPont Inc, among others, as investors awaited news about the U.S.

The Fed has been gradually reducing its bond portfolio, a move that has likely contributed to higher borrowing rates.

The Fed raised rates four times last year and signaled in December that it would do so twice this year.

Risk is "on" consequently and financial markets are adjusting prices to accommodate for the new "patient" US Fed.

The committee said it will continue to run monetary policy in an ample-reserve regime, where control over short-term interest rates "is exercised primarily through the setting of the Federal Reserve's administered rates".

He said the committee is now "evaluating the appropriate timing" for the end of balance sheet runoff and will be finalizing these plans at coming meetings, noting that it will try to avoid "unnecessary market disruption".

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The slight downgrade in the Fed's language around rate increases included a change in its description of economic growth from "strong" to "solid", and it noted that market-based measures of inflation compensation have "moved lower in recent months".

In his news conference, Powell said the Fed's key priority was to sustain the economic expansion.

Analysts say a comprehensive trade deal between the world's two largest economies would most likely boost risk sentiment and lead to a weaker United States dollar.

Some of the trouble spots the Fed is coping with are unavoidable, like a slowdown in Europe and Brexit.

Equity markets have been relieved by a change of heart at the U.S. Federal Reserve, which signaled this week that its three-year drive to tighten monetary policy may be at an end amid a suddenly cloudy outlook for the U.S. economy.

Business and consumer confidence, and a drop in expectations for inflation, may be even more concerning to a central bank that views public psychology as an important influence on future economic outcomes.

Powell did capitulate on Wednesday, this theory agrees - not to the markets but to the tweeter-in-chief, who's repeatedly attacked the Fed.

What's changed since the Fed's December meeting?

"I don't think they are necessarily done with this rate hike cycle", English said. Last December, the Fed issued a projection that it expected to raise rates 2X in Y 2019, down from its previous projection of 3X.

Oil prices rose after USA government data showed signs of tightening supply and as investors remained concerned about supply disruptions following US sanctions on Venezuela's oil industry.

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