US dollar falls as Fed keeps rates unchanged

Washington: The US dollar decreased against most other major currencies on Wednesday as the Federal Reserve left its benchmark interest rates unchanged.

The US central bank on Wednesday decided to maintain the target range for the federal funds rate at 1.25 to 1.5 percent after the conclusion of its two-day meeting, while giving an upbeat assessment of recent US economic growth.

“Gains in employment, household spending, and business fixed investment have been solid, and the unemployment rate has stayed low,” the Fed’s policy-making committee said in a statement.

The Fed also expected US inflation on a 12-month basis to “move up this year and to stabilize” around the central bank’s two percent target over the medium term.

The Fed’s current Chair Janet Yellen will hand over the leadership of the central bank to Jerome Powell later this week.

“There were no surprises in today’s statement. The Fed remains committed to gradual hikes, the first this year likely in March. For now, participants are taking stronger growth in stride but, as always, they will monitor incoming data,” said Chris Low, chief economist at FTN Financial.

On the economic front, private-sector employment increased by 234,000 from December to January, on a seasonally adjusted basis, beating market estimates, according to the National Employment Report released by the ADP Research Institute Wednesday.

The ADP figure is widely seen as a pre-indicator for the non-farm payrolls report due on Friday.

The dollar index, which measures the greenback against six major peers, decreased 0.04 percent at 89.120 in late trading.

In late New York trading, the euro rose to 1.2416 dollars from 1.2405 dollars in the previous session, and the British pound climbed to 1.4184 dollars from $1.4153 in the previous session. The Australian dollar lost to 0.8052 dollar from 0.8084 dollar.

The US dollar bought 109.10 Japanese yen, higher than 108.78 yen of the previous session. The US dollar fell to 0.9309 Swiss franc from 0.9340 Swiss francs, and it moved down to 1.2305 Canadian dollars from 1.2329 Canadian dollars.