Fed Holds Rates Steady Despite Weakening Dollar and Inflation Fears

The Federal Reserve kept interest rates steady at 3.50-3.75 percent in a rare three-way-debated meeting, with three officials dissenting in favor of a 25bps hike.

The decision was seen as hawkish optics, but the data soon took over: the advance estimate showed Q2 GDP slowing to 1.5 percent annualized, well below the 2.3 percent consensus, on softer government spending and a wider import drag.

The dollar weakened broadly, with the DXY dropping roughly 0.8 percent to close near 100.00, while the yen surged 3 percent against the dollar in one of its largest single-day jumps since late 2022.