Dollar stopped falling after Powell talked about the need for further rate hike

On Wednesday, the dollar reversed after the speech of the head of the Fed Jerome Powell. According to the Fed’s forecasts, in 2023, the borrowing costs will increase at least by 75 basis points. Also, the number of unemployed will increase, and economic growth will be suspended.

Inflation data gave some hope to investors that Powell could insist on monetary easing at Wednesday's press conference. However, Powell said that it is not yet the time to reduce interest rates, and the Fed makes a plan that will bring inflation back to the 2% target.

Chief market strategist at Corpay Karl Schamotta said that markets didn’t expect such hawkish rhetoric. 

Politicians dashed hopes for easing financial conditions with statements about the need for "constant growth".

The Fed increased the terminal rate projections to 5.1%. Chamotta added that this is a signal that more evidence of reducing inflationary pressures needs to be found. This should be done before the Fed takes any significant action.