The Federal Reserve kept rates steady at 3.50%-3.75% in a 9-3 vote, sparking USD selling despite hawkish dissent from three officials.
The Federal Reserve left its benchmark interest rate unchanged at 3.50%-3.75% on Wednesday, defying expectations from three regional presidents who favored a 25-basis-point hike. The 9-3 vote marked the first divided decision of the year, with Cleveland’s Beth Hammack, Minneapolis’s Neel Kashkari, and Dallas’s Lorie Logan dissenting in favor of tighter policy.
The Fed noted solid economic expansion but acknowledged persistent inflation driven partly by energy supply shocks. Markets had priced in a near-certain hold, though the hawkish dissent raised questions about future moves, particularly for September. The US Dollar Index (DXY) fell 0.5% to near 100.90, while Treasury yields declined across the curve.
The dollar’s broad sell-off extended against major currencies, with the strongest losses against the Australian dollar. Traders now await further signals on whether policymakers will support another rate increase later this year.