The Dollar Index climbed back above 100 on Wednesday as markets digested the latest FOMC decision. As widely anticipated, the Federal Reserve left interest rates unchanged at Kevin Warsh’s first meeting as Fed Chair. However, the accompanying projections were viewed as more hawkish than expected, with roughly half of FOMC participants now anticipating at least one rate increase before year-end.
The Fed also sharply upgraded its inflation outlook. The 2026 PCE inflation forecast was raised to 3.6%, up from 2.7% in March, while the core PCE projection was revised to 3.3% from 2.7%. In response, traders have fully priced in a 25-basis-point rate hike by the end of the year. The dollar advanced broadly, recording its strongest gains against the British pound and the euro.
