US Dollar Index drops after Fed maintains rates and warns on economic risks
The Federal Reserve (Fed) left its benchmark interest rate unchanged at 4.5%, in line with expectations, but struck a more cautious tone in its policy statement. While noting that the labor market remains solid and economic activity continues at a steady pace, the Fed acknowledged that inflation is still "somewhat elevated" and that both inflation and unemployment risks have risen. The Committee reaffirmed its commitment to data-dependence and reiterated that policy adjustments remain on the table should downside risks materialize. Balance sheet reduction will continue at the current pace.
The US Dollar Index (DXY) slid to 99.50 following the release, reflecting market concerns about the Fed's risk assessment. The central bank signaled no change in its balance sheet reduction pace, but emphasized its readiness to adjust policy if conditions worsen. Investors now await Chair Jerome Powell's presser.
Fed holds rates at 4.5%, acknowledges elevated inflation and rising risks.
Labor market remains strong; economic activity expands despite trade volatility.
US Dollar Index falls to 99.50 as markets digest cautious Fed stance
Source: Fxstreet
