Dollar Index recovers from 14-month low; Fed delivers super-sized 50 bps rate cut

The US dollar is seen recovering after having slumped sharply yesterday following Federal Reserves jumbo interest rate cut. The dollar index that measures the greenback against a basket of currencies plunged to a fresh 14-month low in the previous session after the Federal Reserve (Fed) unexpectedly implemented a significant 50 basis point (bps) reduction in interest rates and forecast rates falling by another half of a percentage point by the end of this year. However, he also said that he does not expect the era of ultra-low interest rates to return and that the neutral rate will likely be significantly higher than the previous regime. The DXY today recovered yesterdays lost momentum and is currently quoting at 100.62, up 0.33% on the day. Fed Committee said that it has gained greater confidence that inflation is moving sustainably toward 2 percent, and judges that the risks to achieving its employment and inflation goals are roughly in balance. Fed officials also expect to continue lowering rates next year, with the projections indicating rates will be lower by another full percentage point by the end of 2025.

 

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