Fed Plans Keep Zero Rates till 2013, Dollar Hurt

US DollarThe US dollar slumped against some other currencies, including the euro, the yen and the franc, after the Federal Reserve kept its key Federal Fund rate near zero and signaled that it may keep interest rates exceptionally low till mid-2013.

The Federal Open Market Committee said in its statement that “economic growth so far this year has been considerably slower than the Committee had expected”. The FOMC outlined the current problems of the US economy, such as ”a deterioration in overall labor market conditions in recent months”, growing unemployment and depressed housing sector. As a result the Committee announced:

    To promote the ongoing economic recovery and to help ensure that inflation, over time, is at levels consistent with its mandate, the Committee decided today to keep the target range for the federal funds rate at 0 to 1/4 percent. The Committee currently anticipates that economic conditions–including low rates of resource utilization and a subdued outlook for inflation over the medium run–are likely to warrant exceptionally low levels for the federal funds rate at least through mid-2013.

The euro reacted favorably to the statement at first, but erased gains later. The drop was short-lived, though, and currently EUR/USD shows a strong rally. The Swiss franc reached yet another record against the greenback before retreating. The franc currently moves down against the dollar, but it’s likely just a temporary correction after a strong rally.

EUR/USD surged from 1.4176 to 1.4339 as of 20:21 GMT today. USD/JPY dropped from 77.74 to 77.03. USD/CHF slumped from 0.7545 to 0.7197 and reached earlier its new all-time low of 0.7083.

If you have any questions, comments or opinions regarding the Swiss Franc, feel free to post them using the commentary form below.

Earlier News About the Swiss Franc:

    CHF at New Record vs. USD, Gains vs. Other Currencies (2011-08-08)
    Intervention: Way to Weaker Franc or Bluff of SNB? (2011-08-08)
    Swiss Franc Prevails Despite Intervention (2011-08-04)
    Siwss Franc Retreats From Maximums (2011-08-03)
    Swiss Franc on Record Against Everything (2011-08-01)

This entry was posted on TopForexNews on Tuesday, August 9th, 2011 at 8:21 pm and is filed under Swiss Franc. You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.

Fed Plans Keep Zero Rates till 2013, Dollar Hurt Fed Plans Keep Zero Rates till 2013, Dollar Hurt Reviewed by Sopheap Chhin on 11:29:00 AM Rating: 5

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