FOMC Rate Hike Fuels Dollar Surge Amid Solid US Economy
The Federal Reserve raised interest rates for the first time in three years, sparking a surge in the US dollar against major currencies. The dollar-yen rate rose to the 156 range, with dollar-yen settling at 156.36 yen. This move was fueled by strong US economic indicators, including August retail sales that exceeded expectations.
The Federal Open Market Committee (FOMC) announced a unanimous decision to raise the target range for the federal funds rate by 0.25 percentage points to 3.75-4.00%. The statement acknowledged the solid pace of economic activity and resilient household spending, while expressing caution on prices due to elevated inflation.
The FOMC participants' interest rate projections revealed that staff forecasts assume one additional rate hike before year-end. Inflation management was positioned as a policy priority, with language confirming that rate hikes would 'support the timely return of inflation to 2%.'