The dollar index, which measures the greenback against six major peers, decreased 0.07 percent to 103.2667 in late trading, after hitting four-week lows earlier in the session.
"Holding the target range steady at this meeting allows the committee to assess additional information and its implication for monetary policy," the Federal Open Market Committee said in a statement.
The Fed also projected the economy to grow 1 percent this year, higher than the estimate of 0.4 percent in March. GDP growth estimates for 2024 were lowered by 0.1 percentage points to 1.1 percent.
In the opening comments at his news conference, Fed Chair Powell said that "nearly all" policymakers "expect that it will be appropriate to raise interest rates somewhat further by the end of the year."
New forecasts released alongside the decision showed that most Fed officials expect federal funds rates to rise to 5.6 percent, suggesting two more hikes are on the horizon by December.
After the announcement of the decision, the U.S. dollar unexpectedly surged, recovering most of the losses it had experienced prior to the decision's release.
"The slowdown of U.S. inflation in May to 4 percent has provided the Federal Reserve with the confidence to pause rate hikes at the 5-5.25 percent range following ten straight rate increases since March last year," said Srijan Katyal, global head of strategy and trading services at international brokerage firm ADSS.
In late New York trading, the euro rose to 1.0836 U.S. dollars from 1.0790 dollars in the previous session, and the British pound was up to 1.2668 U.S. dollars from 1.2602 dollars in the previous session.
The U.S. dollar bought 139.6670 Japanese yen, lower than 140.2840 Japanese yen of the previous session. The U.S. dollar decreased to 0.8992 Swiss franc from 0.9059 Swiss franc, and it increased to 1.3313 Canadian dollars from 1.3311 Canadian dollars. The U.S. dollar increased to 10.7148 Swedish Krona from 10.7138 Swedish Krona.
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