- Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd.
The U.S. Dollar stayed lower following the Federal Reserve's decision to continue tapering its asset purchases and maintain interest rates near zero even after bond-buying scheme is phased out. To combat recession and spur economic growth, the Fed has held short term interest rates at record low since 2008, while printing trillions of dollars to buy up bonds. However, the central bank decided to taper the programme once again by a further $10 billion. Thus, as of July the Fed will buy $35 billion per month, keeping the pace to stop the programme late this year, as Yellen reiterated that the Fed is likely to make further cuts in "measured steps".
After the Fed changed its economic outlook for the U.S., Janet Yellen said she sees some uncertainty around the growth forecast. While in March the central bank expected the nation's economy to expand between 2.8% to 3.0%, currently policymakers see GDP growth in a range of 2.1%-2.3% after the economy unexpectedly contracted 1.0% in the beginning if the year. She also added that unemployment has fallen by more than the Committee expected, highlighting that the labour market has continued to broadly improve and that the slack in the economy has diminished. Nevertheless, the officials will closely watch incoming data on economic and financial developments in the near future and employ its policy tools as appropriate until the outlook for the labour market improves substantially in a context of price stability.
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