The dollar gained ground on Wednesday as the Federal Reserve hiked its target interest rate by three-quarters of a percentage point to combat a disruptive inflation spike.
Reuters
June 15, 2022 / 11:55 PM IST
(Representative Image)
The U.S. dollar extended its gains on Wednesday, after the Federal Reserve raised its target interest rate by three-quarters of a percentage point to stem a disruptive surge in inflation.
The U.S. Dollar Currency Index, which tracks the greenback against six major currencies, was up 0.35% at 105.66.
The US Federal Reserve on June 15 announced a three-quarter of a percentage point or a 75 bps hike in key lending rates, in what is being seen as a move to curb the spiralling inflation.
The US central bank, while announcing the rate hike, said it is “strongly committed” to returning inflation to two percent. It projected a slowing down of the economy in the months to come, and a likely increase in the rate of unemployment.
The 75 bps rate hike, as announced by the Fed, is biggest since 1994, and was delivered after recent data showed little progress in its inflation battle.
The stricter monetary policy was accompanied with a downgrade to the Fed’s economic outlook, with the economy now seen slowing to a below-trend 1.7% rate of growth this year, unemployment rising to 3.7% by the end of this year, and continuing to rise to 4.1% through 2024.
While no policymaker projected an outright recession, the range of economic growth forecasts edged toward zero in 2023 and the federal funds rate was seen falling in 2024.
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