The U.S. dollar decreased against most major currencies on Wednesday following Federal Reserve's decision to raise interest rate for the first time in nine years, paring gains made immediately after the announcement.
The U.S. central bank on Wednesday decided to raise benchmark interest rate by 25 basis points, marking an end to the era of extraordinary easing monetary policy. Given the considerable improvement in labor market conditions this year and that it is reasonably confident that inflation will rise, the central bank decided to raise the target range for the federal funds rate to 0.25-0.5 percent, the Fed said in a statement after concluding a two-day policy meeting on Wednesday.
According to the statement, in light of the current shortfall of inflation from the central bank's 2 percent target, the Fed expects that the developments of economic conditions will warrant "only gradual" increases in the benchmark interest rate.
Analysts said the Fed's wording cues that it would follow a gradual pace of rate hikes weighed on the greenback. The dollar index, which measures the greenback against six major peers,was down 0.28 percent at 97.940 in late trading. In late New York trading, the euro increased to 1.0968 dollars from 1.0918 dollars in the previous session, and the British pound climbed to 1.5054 dollars from 1.5043 U.S. dollars in the previous session.
The Australian dollar rose to 0.7253 dollar from 0.7195 dollar. The U.S. dollar bought 121.89 Japanese yen, higher than 121.76 yen of the previous session. The U.S. dollar dropped to 0.9835 Swiss franc from 0.9903 Swiss franc, and it went up to 1.3773 Canadian dollars from 1.3729 Canadian dollars.
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