HSBC Economics Paul Mackel said in a report that unless the Federal Reserve unexpectedly raises interest rates, its decision this week may not bring a new upward catalyst for the dollar. Federal Reserve Chairman Walsh has acknowledged that inflation is above target and expressed a commitment to price stability. He said that if this week's meeting only fits these views, the dollar is unlikely to rise sharply because the market is ready for interest rate hikes later this year. “However, we also recognize that some people are considering the idea of the Federal Reserve's surprise rate hike, just as it suddenly did in February 1994.” He said that if the market welcomed it as a cautious move, it would boost the dollar.

HSBC Economics Paul Mackel said in a report that unless the Federal Reserve unexpectedly raises interest rates, its decision this week may not bring a new upward catalyst for the dollar. Federal Reserve Chairman Walsh has acknowledged that inflation is above target and expressed a commitment to price stability. He said that if this week's meeting only fits these views, the dollar is unlikely to rise sharply because the market is ready for interest rate hikes later this year. “However, we also recognize that some people are considering the idea of the Federal Reserve's surprise rate hike, just as it suddenly did in February 1994.” He said that if the market welcomed it as a cautious move, it would boost the dollar.