The dollar index traded around 102.5 on Thursday after falling nearly 1% in the previous session, as the Federal Reserve raised interest rates by a widely expected half-percentage point but nixed expectations for even larger rate hikes ahead. The central bank increased its benchmark interest rate by 50 basis points, the largest since 2000, and Fed Chair Jerome Powell said that similar moves were on the table for June and July.
Meanwhile, he clarified that the Fed is “not actively considering” a larger, 75 basis point rate hike. The dollar depreciated the most against antipodean currencies after the Fed announcement as investors dialed back bets on outsized US interest rate hikes. Investors also assessed economic risks stemming from the Fed’s battle against surging inflation, denting haven demand for the greenback.
