FX.co ★ Dollar Index Slips as Fed Cuts Rates

The dollar index fell below 99.0 on Wednesday, edging closer to its lowest point since late October. This decline followed the Federal Reserve's expected 25-basis-point rate cut, accompanied by the indication of only one more rate reduction planned for 2026. Significantly, the Fed’s revised statement referenced “the extent and timing of additional adjustments,” implying that officials are likely to pause further rate cuts in January as they await more data to evaluate the economic trajectory accurately. The updated projections reveal a substantial revision to the growth outlook. Policymakers now forecast the economy to grow by 2.3% next year, up from the 1.8% predicted in September. Additionally, growth in 2027 is projected to be slightly higher at 2%, compared to the previous estimate of 1.9%. Meanwhile, the Fed adjusted its inflation forecasts for 2025 to 2.5% from 2.6%, and for 2026 to 2.4% from 2.6%, although both figures still exceed the central bank’s 2% target.