The central bank left interest rates unchanged, and it promised to keep the rates lower for a few more years to sustain the economic recovery. With rates hovering near zero until at least 2023, how will this impact the United States dollar?
The Federal Open Market Committee (FOMC) stated that the benchmark fed funds rate would stay on the target scale of 0% and 0.25%. Policymakers consented to leave rates in this range for three more years, or inflation consistently increases above the 2% target rate.
A month after Federal Reserve Chair Jerome Powell established a new inflation approach, the FOMC ratified specific language to maintain the latest objective
The Eccles Building also published the latest economic predictions, including a lower gross domestic product (GDP) drop this year and a falling lay-off rate. The Federal Reserve expects 4% GDP growth in 2021, 3% in 2022, and 2.5% in 2023. It expects the jobless rate to slide to 4% by 2023.
Ultimately, the Federal Reserve stated that the economic recovery would depend primarily on the coronavirus, remarking that the economy is closed down by the COVID-19 and cannot complete full recovery until the health crisis is better controlled.
The leading stock indexes climbed on the news, with the Dow Jones Industrial Average (DJIA) leading the way by adding 300 points to just under 28,300. Gold and silver prices hardly reacted, rising $6.20 and $0.051, respectively.
The US Dollar Index, which measures the dollar against a basket of currencies, rose 0.01% to 93.06, from an opening of 93.05. The index has been cutting back this month, but it is still down 3.5% year-to-date.
The USD/CAD currency pair dropped 0.23% to 1.3158, from a start of 1.3186, at 18:29 GMT on Wednesday. The EUR/USD declined 0.19% to 1.1824, from the beginning of 1.1848.