The dollar strengthened after the Fed meeting, and stocks fell. Recovery will be long, warns Powell

Wednesday’s long-awaited Federal Reserve meeting came as no surprise. But Governor Jerome Powell sent wall street’s main stock indexes lower with his not-so-optimistic outlook, but the dollar reacted with a boost.

The Federal Reserve left the base interest rate unchanged after wednesday’s meeting, close to zero. Nor has it changed the monthly volume of bond purchases that it uses to pump the necessary liquidity into the financial system to support economic activity in the United States.

Still, markets reacted. Fed Governor Jerome Powell has expressed concern about further economic developments, saying that the road to a vigorous economic recovery will be long and a return to pre-crisis levels will be very gradual. According to Powell, ongoing growth in asset markets is mainly fueled by fiscal impulses and positive expectations associated with vaccination.

Wall Street reacted to Powell’s words with a decline. The S&P 500 lost more than 2.5 percent, its biggest daily drop since October last year. By contrast, the dollar rose more than half a percent against a basket of major currencies.

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