Dollar Suffers After Fed Rate Decision
The US Dollar took a hit after the Federal Reserve's decision on Wednesday to keep interest rates unchanged at 3.5%-3.75%. The benchmark rate was left untouched despite a string of weaker-than-expected economic data, including a GDP miss that saw growth slow to an annualized rate of 1.5% in the second quarter.
The Personal Consumption Expenditures (PCE) Price Index, the Fed's preferred inflation gauge, fell by 0.1% MoM in June, while the annual rate slowed to 3.7% from 4.1%. The Core PCE Price Index slowed to 3.3% YoY from 3.4% in the previous month.
The decision saw three dissenting votes in favor of an immediate rate hike, reinforcing expectations that policymakers remain concerned about persistent inflation. However, the US Dollar failed to benefit from the decision and has since turned lower, as investors questioned whether the central bank would be willing to deliver additional rate hikes amid growing political pressure.
Market attention now shifts to the Bank of Japan (BoJ), which is widely expected to leave its policy rate unchanged at 1% on Friday. Investors will focus primarily on the updated economic projections and Governor Kazuo Ueda's remarks for clues on whether another rate hike could come as early as October or be delayed until December.