FOMC minutes: Staff’s projections included a mild recession starting later this year

The Federal Open Market Committee (FOMC) released the minutes of the March 21-22 meeting, spurring little action across the FX board. According to the document, staff’s projections included a “mild recession starting later this year, with a recovery over the subsequent two years”. 

In March, the Federal Reserve (Fed) raised the key interest rates by 25 basis points to 4.75% - 5.0%, as expected amid banking turmoil. Since the meeting, banking concerns eased and inflation data released on Wednesday showed the Consumer Price Index slowed to 5% in March, the lowest since May 2021; however, the Core rate edged higher to 5.6%.  

Market reaction: 

The US Dollar remains at session lows, with the Dollar Index headed toward the lowest close since early February, down 0.65%. EUR/USD rose to test the 1.1000 area. US yields held steady, with the US 10-year around 3.43% and the 2-year slightly below 4%.