I guess core points of the October FOMC decision are well known, and there is no need to repeat them again. So, let's move on to more interesting details.

After the third rate cut in the last four months, the Fed made it clear that it was not going to make further interest rate cuts in “preemptive”, “insurance”, ‘mid-cycle adjustment” mode, etc. The risks of the trade war have subsided, the Fed has properly responded to the main economic risks. Now it is time to wait. The famous wording “act as appropriate in order to sustain expansion” was replaced by “will further assess appropriate path of the target range [Yes, the Fed can set only target range of the interest rate] taking into account the incoming information”.

Outside the context, this commentary is seen as a slightly hawkish bias in the policy because the Fed becomes more patient than proactive.  However, FOMC statement and Powell speech contained other remarks that seem to have outweighed how the Fed stance was perceived by the market and produced “whipsaw” that shook greenback bulls:

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But what are those other remarks we are talking about?

Those who watched Powell's speech probably noted his following comment:

“I think we would need to see a really significant move up in inflation that is persistent before we even consider raising rates to address inflation concerns”

Statements with such a level of certainty rarely come from the mouths of the heads of the world Central Banks. But here everything is clear - until there is a steady inflation hike (probably several months in the range of 2.2-2.5%), we can forget about rate hikes in the US. This is what basically produced dollar sell-off.

Other important comments by Powell include:

“Risks associated with trade tensions seem to have eased”

“One of the interest points with the repo market that was surprising was that the liquidity provided by the Fed did not spread as expected. Officials are looking for a fix”.

"The growth of investment, export and production remains weak, but consumption and the labor market are strong”.

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