USD/JPY: FOMC Statement

Following the release of the FOMC statement, the US Dollar lost ground against the Japanese Yen, sending the currency pair to the 111.84 area from earlier highs of above 112.0. As it was widely expected by the market, the Federal Reserve decided to leave its interest rates unchanged, keeping the target range for the federal funds rate between 1.00% and 1.25%. However, the FOMC appeared to be once again concerned over inflation, saying that, overall, inflation has declined and is running below the Fed's 2% target. Furthermore, due to a lack of hawkishness of the statement and no clear hints on how the process of the balance sheet shrinkage will evolve, the market sentiment regarding the US economic outlook remained relatively subdued.