Dollar falls after Fed's statements on rate cuts this year

Reuters reports that the dollar fell on Thursday after US Federal Reserve (Fed) stated the monetary policy easing was likely later this year, despite an expected rise in inflation. The regulator kept its rates unchanged within the 4.25–4.50% range at the meeting on Wednesday.

According to LSEG, traders are forecasting two quarter-point cuts in borrowing costs in 2025, with the first one expected in July.

The chairman of the US central bank Jerome Powell says the current monetary policy allows to deal with existing risks and uncertainties. He believes that the best decision at the moment would be to take a pause to assess the country’s economic outlook.

Growing US GDP, low unemployment and rising inflation mean that the rates will be on hold until late summer, ING economists state.

Capital.com analyst Kyle Rodda thinks the Fed plans to analyze the one-time price shock caused by the import tariffs and will pay close attention to the risks of a slower economic growth and a cooling US labor market.