Federal Reserve decision looms, DAX opens with a slight upward trend
In the evening of today, the US Federal Reserve is set to announce its latest interest rate decision. The central bank is expected to maintain the target range for the federal funds rate at 4.25% to 4.5%, continuing its cautious approach to monetary policy.
The Fed remains committed to supporting maximum employment and returning inflation to its 2% objective. They will continue reducing their holdings of Treasury securities and agency debt and mortgage-backed securities, and are prepared to adjust monetary policy as needed if risks emerge that may impede their goals.
The European common currency (Euro) is trading slightly unchanged against the US dollar, with one euro currently worth 1.1847 US dollars. Market observers do not expect a new rate step but are anticipating hints about the European Central Bank's further monetary policy strategy.
Meanwhile, the Frankfurt Stock Exchange opened with slight gains this morning. The DAX was calculated at around 13,235 points, an increase of 0.1 percent compared to the previous day's close. However, some notable stocks are moving against the trend. MTU, Covestro, and Allianz are experiencing a decline in their share prices, while Deutsche Post, Delivery Hero, and SAP are leading the list of stocks with gains.
In the case of SAP, their share price is going up, while MTU's and Covestro's share prices are currently decreasing. Allianz's share price is also declining. The uncertainty about the economic outlook has lessened but remains elevated, prompting continued cautious and data-dependent policymaking.
Vice Chair Michelle Bowman indicated she preferred a 25 basis point rate cut at the recent meeting, suggesting some Committee members see room for easing. However, the official stance was to maintain current rates. The Fed's post-meeting messaging indicates a "wait and see" approach, balancing solid economic activity and low unemployment against somewhat elevated inflation, with a readiness to tighten or ease policy depending on future data.
[1] Federal Reserve Press Release, July 29-30, 2025: https://www.federalreserve.gov/newsevents/pressreleases/monetary20250729a.htm [2] Bowman calls for rate cut, others push back, Reuters, August 4, 2025: https://www.reuters.com/business/us-fed-bowman-calls-rate-cut-others-push-back-2025-08-04/
Other businesses in the industry of finance, such as MTU and Covestro, saw their share prices decreasing, while SAP, a different business entity, experienced an increase. The European Central Bank, operating in a separate business sector, is expected to reveal more about its future monetary policy strategy.
