Global weekly: Loose policies

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As the US Federal Reserve kept its policy rate unchanged on Wednesday, now both the ECB and the Fed are supporting markets. Financial markets continued their surge, but the US dollar fell sharply.

Macro update

Fed policymakers left their policy rates unchanged at their March meeting, as was widely expected. Official projections for the federal funds rate showed that the Fed scaled back its expectation for rate hikes. This leaves the median forecast now at 0.9% in 2016 down from the 1.4% indicated in December. Our view is that the Fed will keep interest rates on hold this year.

The Fed is now signaling a more accommodative monetary policy path compared with December. Fed projections also showed downward revisions to GDP growth and inflation this year, while core inflation and unemployment were unchanged.

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