Dollar Gained After FOMC

The greenback gained slightly after the Fed announced to keep its interest rate unchanged at 5.25% as expected this afternoon.

The Fed repeated their view on the inflation and economy as shown in the previous FOMC statement. Despite the unchanged tone, the Fed dropped the word “elevated” from the description of core inflation. Instead, they said in a similar way that the core inflation has improved modestly. Their assessment of the broad economy and the housing market provided no surprise either. The Fed said that economic growth moderates in the first half of the year and housing adjustment is ongoing. At the end, they reiterated that future policy depends on evolution of economy and growth. Following the FOMC announcement, the euro dipped below 1.3450 and refreshed session low to 1.3425 against the dollar.

Earlier in the session, the GDP report released this morning did little impact to the market as investors were waiting for the FOMC decision due later. The report showed the nation’s economy grew at a rate of 0.7% in the first quarter, the slowest pace in the more than four years. Core PCE prices for the first quarter increased from 2.2% to 2.4%, indicating core inflation remains elevated.