The US dollar fell against major peers, including the euro, Swiss franc, and Japanese yen, on Wednesday after the Federal Reserve lowered interest rates in a widely expected move, but indicated it will likely pause its easing cycle at the next policy meeting in January.
The Fed's decision to lower the benchmark policy rate by a quarter of a percentage point to the 3.50%-3.75% range drew three dissents: Chicago Fed President Austan Goolsbee and Kansas City Fed President Jeffrey Schmid argued that the policy rate should be left unchanged, while Fed Governor Stephen Miran again advocated for a larger half-percentage-point reduction.
"In considering the extent and timing of additional adjustments to the target range for the federal funds rates, the Committee will carefully assess incoming data," the Federal Open Market Committee said in a statement, a language that in the past has been used to signal a pause in policy actions.
Dollar trims loss
The greenback, however, has since trimmed some of its losses.
"The statement emphasized weakness in the labor market as the principal rationale for the 25-basis-point cut, and this detail is what the market has picked up on, suggesting the Fed could continue easing policy, even though the expectations for easing in 2026 haven't changed with one 25 basis point priced in," said Michael Rosen, chief investment officer at Angeles Investments, in Santa Monica, California.
Fed's Powell declines to say whether he will stay on as a governor
Federal Reserve Chairman Jerome Powell said on Wednesday that he has no guidance on whether he will serve out his term as governor when his term as the US central bank's leader ends.
"My thought is that I really want to turn this job over to whoever replaces me with the economy in really good shape," Powell said. "I want inflation to be under control, coming back down to 2% and I want the labor market to be strong.
"I'm focused on my remaining time as chair," he said, and added he had nothing to say about staying on the Fed beyond the end of his chair term in May.