On September 21, 2023, the U.S. dollar reached its highest level in 6.5 months after the Federal Reserve indicated that it will continue its restrictive monetary policy. The Swiss franc weakened as the Swiss National Bank decided to keep rates unchanged for the first time since March 2022.
The Federal Reserve held interest rates steady within the expected range of 5.25%-5.50%. However, they emphasized their commitment to a hawkish policy that aims to control inflation without harming the economy or causing job losses. The Fed's updated projections suggest that interest rates will be tighter than previously thought until 2024.
In Europe, Sweden's Riksbank and Norway's central bank raised rates as expected. The pound fell to its lowest level since April ahead of the Bank of England's policy announcement.
The Japanese yen reached its lowest level since November before the Bank of Japan's policy announcement on Friday. However, market analysts doubted that there would be any significant policy changes in the meeting.
Both the Australian and New Zealand dollars weakened after the Fed's meeting. However, the New Zealand dollar received some support after better-than-expected economic growth data for Q2 2023.
European equities faced challenges as the Fed hinted at the possibility of another rate hike, following a rapid increase in rates over the past 18 months. This was further impacted by the Swiss National Bank's decision to keep rates unchanged and Norway's central bank signaling a potential rate hike in December.