Dollar Index Hits Seven-Week Low After Fed Rate Cut

According to data from TradingEconomics, the dollar index fell to around 98.5 on Thursday, marking its lowest level in over seven weeks, after the Federal Reserve implemented its third interest rate cut of the year by a quarter percentage point, as expected. The Fed's tone was less hawkish than the markets had anticipated, with Chairman Jerome Powell stating that rate hikes are 'off the table,' prompting traders to price in the possibility of two additional cuts in 2026, although the Dot Plot indicates only one cut of 25 basis points next year.

The Fed also announced the commencement of purchasing short-term Treasury bonds to enhance market liquidity starting December 12, with the first round amounting to approximately $40 billion.

New Fed forecasts suggest an economic growth rate of 2.3% for 2026, up from 1.8% in September estimates, with expected growth of around 2% in 2027, slightly higher than previous forecasts. The Fed also lowered its inflation expectations to 2.5% for 2025 and 2.4% for 2026, though still slightly above the 2% target.