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Fed Keeps Interest Rates Unchanged, Dollar Falls Down

September 21, 2010 (Last updated on September 26, 2010) by

The Federal Reserve decided to keep interest rates at it current record low levels, increasing concerns for the US economy and driving dollar down. Better than expected report on building permits clearly wasn’t able to outweigh the Fed decision. EUR/USD trades now at 1.3202 after it opened at 1.3061.

Building permits were at a seasonally adjusted annual rate of 569k in August. Forecast said it would remain at the previous (revised) July rate of 559k. Housing starts were at a seasonally adjusted annual rate of 598k in August. This is above the revised July estimate of 541k and analysts’ estimates of 550k.

The Federal Open Market Committee decided today to maintain the target range for the federal funds rate at zero to 0.25% and said in its policy statement:

Measures of underlying inflation are currently at levels somewhat below those the Committee judges most consistent, over the longer run, with its mandate to promote maximum employment and price stability. With substantial resource slack continuing to restrain cost pressures and longer-term inflation expectations stable, inflation is likely to remain subdued for some time before rising to levels the Committee considers consistent with its mandate.

The FOMC also signaled that it may provide additional support to the US economy if necessary.

If you have any comments on the recent EUR/USD action, please, reply using the form below.

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