In a surprise move, the U.S. Federal Reserve announced the raise by 0.25% of its primary credit rate, known as the discount rate, used to lend banks emergency loans.
Even if the Fed tried to convince traders that the rate hike does mean a change in monetary policy, it still represents the most important step towards a lift in Fed funds rate.
The U.S. dollar surged up immediately after the announcement as traders saw an acknowledgment by the central bank of the economy improvement, which foresees change in monetary policy sooner than expected.
In another sign of coming back to normalized situation, the Fed also shortened the maturity on discount-window loans from 28 days to overnight.
This move should increase dollar positive reactions to good U.S. economical data in the next weeks.
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