The US dollar fell against most major rivals on Wednesday, extending losses after the Federal Reserve’s policy decisions.
The Federal Reserve announced an interest rate cut of 50 basis points from 5.5% to 5%, while many analysts expected a smaller 0.25% cut.
It’s the first decision of its kind in 2020, and puts an end to the latest cycle of policy tightening, which started in March 2022.
The Fed expected a similar cut by the end of 2024, and also expected a 1% cut in 2025, and a 0.5% cut in 2026.
The Fed’s statement expressed confidence that inflation is sustainably heading towards 2%, and that the risks facing employment and inflation have become balanced.
The Fed expects the growth rate to hold at 2% in 2024, 2025, and 2026.
It also expects the unemployment rate at 4.4% in 2024 and 2025, before falling to 4.3% in 2026. It reduced the outlook for inflation to 2.6% in 2024, then to 2.2% in 2025, and 2% in 2026.
On trading, the dollar index fell 0.4% as of 19:48 GMT to 100.5, with a session-high at 100.9, and a low at 100.2.
Sterling
The British pound rose 0.5% against the US dollar as of 20:09 GMT to 1.3223.
Earlier UK data showed consumer prices rose 2.2% as expected in August.
Loonie
The Canadian dollar rose 0.1% against its US counterpart as of 20:11 GMT to 0.7358.
Gold prices rose on Wednesday as the dollar lost ground against most major rivals after the Fed’s policy decision.
The Federal Reserve announced an interest rate cut of 50 basis points from 5.5% to 5%, while many analysts expected a smaller 0.25% cut.
It’s the first decision of its kind in 2020, and puts an end to the latest cycle of policy tightening, which started in March 2022.
The Fed expected a similar cut by the end of 2024, and also expected a 1% cut in 2025, and a 0.5% cut in 2026.
The Fed’s statement expressed confidence that inflation is sustainably heading towards 2%, and that the risks facing employment and inflation have become balanced.
Otherwise, the dollar index fell 0.4% as of 19:48 GMT to 100.5, with a session-high at 100.9, and a low at 100.2.
Gold spot prices rose 0.5% as of 19:49 GMT to $2606.6 an ounce.
The Federal Reserve voted to cut interest rates by 50 basis points from 5.5% to 5%, while many analysts expected a smaller 0.25% cut.
The Energy Information Administration reported a drop of 1.6 million barrels in US crude stocks last week to a total of 417.5 million barrels, while analysts expected a drop of 0.2 million barrels.
Gasoline stocks rose 0.1 million barrels to 221.6 million barrels, while distillate stocks rose 0.1 million barrels to 125.1 million barrels.
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