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Dollar Loses Ground After Fed Policy Statement

Dollar Loses Ground After Fed Policy Statement

The U.S. dollar slid against other major currencies after the Federal Reserve announced its monetary policy statement Wednesday afternoon.

The dollar index, which was up at 91.13 in early Asian session, fell into the red around mid morning, and despite moving up after a near two-hour struggle, dropped again after the Fed left interest rates unchanged.

The dollar index, was lost seen at 90.60, down 0.33% from previous close.

Against the Euro, the dollar weakened to $1.2126, sliding from $1.2096.

The Pound Sterling strengthened against the greenback, fetching $1.3939 a unit, up from $1.3910 Tuesday evening.

The Yen gained marginally, firming up to 108.60, but not before easing to 109.04 in the Asian session.

Citing progress on Covid vaccinations and strong policy support, the Federal Reserve on Wednesday upgraded its assessment of the U.S. economy but maintained its ultra-easy monetary policy as widely expected.

The Fed once again kept the target range for the federal funds rate at 0 to 0.25%, and reiterated that it expects rates to remain at near-zero levels until labor market conditions have reached levels consistent with its assessments of maximum employment and inflation is on track to moderately exceed 2% for some time.

A statement from the Fed noted indicators of economic activity and employment have “strengthened,” which reflects a modest upgrade from last month, when the central bank said the indicators have “turned up recently.”

After previously saying inflation continues to run below 2%, the Fed now acknowledges that inflation has risen but largely attributed the increase to “transitory factors.”

The statement from the central bank also said risks to the economic outlook remain due to the ongoing public health crisis, although that reflects an improvement from last month, when the Fed cited “considerable risks to the economic outlook.”

The central bank also said it plans to continue its bond purchases at a rate of at least $120 billion per month until “substantial further progress” has been made toward its goals of maximum employment and price stability.

The material has been provided by InstaForex Company – www.instaforex.com