The Federal Open Market Committee (FOMC) decided unanimously to raise rates by 0.25 percentage points and released a dot plot indicating the possibility of an additional rate hike by year-end. Against this backdrop, US Treasury yields surged and the dollar strengthened broadly.
The US FOMC unanimously raised the policy rate by 0.25 percentage points, from 3.50%–3.75% to 3.75%–4.00%. In its accompanying statement, the committee acknowledged the resilience of economic activity and consumer spending while pointing out that inflation remained elevated.
The dot plot showed that many officials expected at least one additional rate hike by year-end, lifting the median projection to 4.125%. The longer-run neutral rate projection was also revised up to 3.2%.
In the market reaction, the US 2-year Treasury yield was around 4.74%, while the 10-year yield rose from the 4.93% range before the announcement to the 5.02% range. The dollar surged, with USD/JPY briefly reaching the 156 range and the dollar index rising to around 100.35.
At a press conference, Fed Chair Warsh (ウォーシュ) reiterated that price stability was the top priority. He emphasized that inflation remained elevated and argued that further rate hikes were justified.
Going forward, market attention will focus on the divergence between US and Japanese monetary policy and on exchange-rate movements. Some expect the dollar’s upward trend to become entrenched, while the impact of the interest-rate differential could persist depending on the Bank of Japan’s policy direction.