Increased Risks to Inflation

FOMC Unchanged, Increased Risks to Inflation
by Korman Tam

The Federal Reserve, as expected, held monetary policy unchanged at 2% when it announced its decision shortly after 2:00pm. However, the vote to leave rates unchanged was not by unanimous decision with Dallas Fed President Fisher voting in favor of a rate hike. Although the dollar initially jumped higher following the announcement, it quickly relinquished those gains as traders digested the accompanying statement.

FOMC and Interests Rate

June 25 (Bloomberg) -- The dollar was little changed against the euro before the Federal Reserve ends a two-day meeting at which policy makers are forecast to keep the target lending rate at the lowest level in more than three years.

The dollar pared its decline as crude oil prices fell on an unexpected increase in inventories, reducing the need to sell the U.S. currency as a hedge against inflation. Fed Chairman Ben S. Bernanke said on June 9 the central bank would ``strongly resist'' a leap in inflation expectations.