Thursday’s moves on the forex market were largely shaped by the U.S. interest rate decision and Federal Reserve Chair Jerome Powell’s stance during his press conference. The result? A further strengthening of the U.S. dollar. Meanwhile, smaller currencies such as the Japanese yen and Canadian dollar remained relatively unmoved by their own central banks’ decisions. In Poland, inflation continues to decline.
Powell in Control
The Federal Open Market Committee’s (FOMC) decision on Wednesday met market expectations. The federal funds rate was left unchanged in the 4.25%–4.50% range. However, the vote was not unanimous—two FOMC members favored a 25 basis point cut, likely Trump-era appointees.
During the subsequent press conference, Chair Powell maintained a hawkish tone. He stated that U.S. monetary policy remains “moderately restrictive” and that current interest rate levels are appropriate for managing ongoing uncertainty related to inflation and tariffs. When asked whether the Fed considers the rising burden of public debt servicing due to high interest rates, Powell firmly denied it and added that no central bank should factor that into its decisions.
This stance triggered another wave of U.S. dollar appreciation. On Wednesday evening, the EUR/USD exchange rate slipped to 1.14.
No Surprises from Canada or Japan
Interest rate decisions were also announced in other major economies. In Canada, the policy rate was left unchanged at 2.75%, in line with market expectations. The decision had little impact on the Canadian dollar (loonie), which this week has been more influenced by global factors. It weakened against the strengthening U.S. dollar but gained ground against the weaker euro.
Japan also kept its benchmark rate unchanged at 0.5%. Despite the status quo, Japanese policymakers remain cautious due to recent increases in consumer inflation and wages. The yen performed even worse than the loonie on Thursday, weakening against both the dollar and euro. The USD/JPY pair returned to the 150 JPY level—a threshold last seen in early April.
Polish Inflation Near Target
On Thursday morning, Poland released its preliminary consumer price index (CPI) data for July. Forecasts expected a drop from 4.1% year-on-year (YoY) to 2.85% YoY, citing base effects, lower fuel prices, and a stronger złoty. The actual result came in slightly higher at 3.1% YoY—still within the National Bank of Poland’s target range of 2.5% ± 1 percentage point.
Month-on-month (MoM) inflation was also above expectations, rising 0.3% instead of the forecasted 0.15%. Nevertheless, the report confirms that Poland is moving closer to inflation stability.
Despite the inflation data, the złoty remained stable on Thursday. The EUR/PLN hovered around 4.27, USD/PLN stood at 3.73, GBP/PLN fell below 4.94, and CHF/PLN rose above 4.59.
Author: Dawid Górny, Currency Analyst at Walutomat.pl
Source: https://ceo.com.pl/powell-mowi-jasno-stopy-zostaja-dlug-publiczny-to-nie-problem-bankow-centralnych-20315
