The dollar index (DXY00) Wednesday rose by +0.25%. The dollar rose moderately on Wednesday after the FOMC kept interest rates unchanged as expected. The dollar also found support after the FOMC raised its core inflation forecast for this year, a hawkish factor for Fed policy.
The dollar fell back from its best levels Wednesday afternoon when the Fed’s dot-plot still projected two 25 bp rate cuts by the end of this year. Also, the FOMC cut its US 2025 GDP forecast and raised its year-end US unemployment estimate, which is a bearish factor for the dollar. In addition, the FOMC said it would slow the pace of runoff of its balance sheet starting next month, a dovish facto for Fed policy. The rebound in stocks Wednesday reduced some liquidity demand for the dollar.
