U.S. Dollar Slides against the Euro Following Federal Open Market Committee Statement
The U.S. Dollar dropped further against the Euro today in response to statement made by the Federal Reserve after the FOMC meeting, which suggests that the Federal Reserve may not aggressively hike interest rates towards year end. The FOMC decided to keep its benchmark rate unchanged at 2%, while acknowledging the presence of inflationary pressures in the economy.
In contrast, officials of the European Commercial Bank have indicated that they will increase interest rates from the current 4% during their monetary policy meeting next week, thereby widening the rate differential between the U.S. and the Euro zone.
On June 25, 2008 at 00:20 GMT in Sydney, the Euro traded at $1.5673 compared to $1.5665 while the U.S. Dollar traded at 107.88 Yen, compared to 107.83 Yen in late trading in New York.
According to the statement issued by the Federal Reserve, the U.S. economy is showing some few positive signs such as “some firming in household spending,” however, it also said that persistent rise in energy prices will not only quicken inflation but limit economic growth.