Fed Holds Rates, Dollar Falls Amid Hawkish Rhetoric

The Federal Reserve kept interest rates at 3.50-3.75%, but the US Dollar fell broadly after the decision. The vote was nine to three, with three Fed officials preferring an immediate 25-basis-point increase.

Chair Kevin Warsh stressed that inflation would return to target and warned of action if price pressures persist. However, he offered little guidance on the timing or conditions for the next move.

The Dollar's decline was uneven across different currencies, with losses ranging from 0.19% against the Euro to 0.8% against the New Zealand dollar.

RBC noted that the Fed remains on pause 'despite rising uncertainty', citing concerns about inflation persistence in the Middle East conflict and new tariffs.