The Fed delivered what it was expected to do: double the pace of tapering and project a more aggressive interest rate response with its individual forecasts. The dollar initially rallied on the headlines, and new session highs were recorded, but the price action was a bit of a head-fake, as it were. The greenback's gains were quickly pared, though it remained above JPY114 ahead of Chair Powell's press conference.
The market had already discounted two hikes and almost 3/4 of the third hike before the FOMC meeting. The adjustment also requires moving the 2023 profile as well.
The FOMC statement also reads hawkishly, too, in the sense that the Fed acknowledges the solid jobs growth continued, and it no longer characterizes inflation as transitory. Again, this was largely anticipated by Powell's previous remarks.
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