The dollar index climbed to 100.4 on Friday, its highest level in a month and a half, extending gains driven by the latest FOMC decision and a weaker yen. As expected, the Federal Reserve raised the target range for the federal funds rate by 25 basis points to 3.75%–4.00%. It also signaled at least one additional rate increase this year, while Chair Warsh reiterated the Fed’s strong commitment to bringing inflation under control. This helped restore market confidence in both the central bank’s policy path and its credibility.
In contrast, the Bank of Japan also raised borrowing costs by 25 basis points, in line with expectations, but two policymakers dissented. Their opposition suggested the BOJ may move more cautiously on further rate hikes than previously anticipated, putting additional downward pressure on the yen. Over the week, the dollar is up nearly 1.3%.
