Fed to Begin Balance Sheet Normalization in October; One More Rate Hike by Year-End; Crude Oil Prices Jumped on Potential Output Cut Extension

US dollar jumped while Wall Street declined after the FOMC delivered a more hawkish than expected announcement. While the market had largely anticipated the Fed would begin balance sheet reduction in October and leave the policy rate unchanged in September. The members were unmoved by weak inflation and appeared committed to adopt one more rate hike before year-end.