On Wednesday, the dollar's index against a basket of six major currencies had briefly slipped to around 92.245 after the Fed's policy statement but later regained its footing to set a four-month high of 92.834 - marking a 4 percent gain from a trough touched in mid-April. Traders of United States short-term interest-rate futures on Wednesday placed bets that the Federal Reserve will raise rates at least two more times this year.
US stocks moved higher immediately after the Fed's announcement. The Fed had last increased rates in March.
In its announcement, the USA central bank expressed a confident economic outlook, saying that activity had expanded at a moderate rate and that inflation was nearing its 2-percent target. Yesterday, gold prices were higher at the outset of the day, but gave up most of their gains by the end of the day. In March, personal consumption expenditures (PCE) rose 1.9% over the prior year when stripping out food and energy. The committee said that the committee would assess realized and expected economic conditions relative to its objectives of maximum employment and 2 percent inflation.
Despite Trump's complaints during the presidential race that the Fed was aiding Democrats in keeping rates ultra-low under President Barack Obama, his choices for a chairman and for other slots on the Fed's board have been moderates rather than hard-core conservatives who would favor a faster tightening of credit.
The statement said the economy has been growing at a moderate rate. Job gains have been strong, on average, in recent months, and the unemployment rate has stayed low.
In just two weeks the dollar has surged almost four percent against a basket of the most traded currencies, erasing all the losses it had suffered since the start of 2018 .DXY .
A decline in consumer spending in the first quarter could derail economic growth in the consumer-oriented economy, she said.
Late previous year, officials began to revise up their growth projections due to the tax cut legislation, but they held back from revising their interest-rate projections because of low inflation readings.
But the threat of a trade war is looming as Trump has enacted tariffs on solar panels, washing machines, steel and aluminum while threatening to hit China with additional tariffs on $100 billion of goods. Also, business investment continued to grow "strongly". There is a concern that a breakthrough in the trade tensions will be unlikely and any suggestions that there will be a breakdown in talks between the two largest economies in the world presents a risk that the financial markets will react.
The question looming over Wednesday's meeting centered on how officials might raise rates over the coming years, which could potentially shift the central bank from a position of spurring economic growth to restricting it.