The dollar index slipped to around 98.5 on Thursday, its lowest in over seven weeks after the Federal Reserve delivered its third quarter-point rate cut this year, in line with expectations. The Fed also signaled a less hawkish outlook than markets had anticipated and Chair Jerome Powell suggested a rate hike is off the table, prompting traders to price in two additional rate cuts in 2026. However, the Fed’s dot plot points to just one more 25-bps reduction next year. The central bank also announced it will begin buying short-dated Treasury bills to support market liquidity starting December 12, with the initial round totaling approximately $40 billion. Meanwhile, Fed projections now anticipate 2.3% economic growth in 2026, up from 1.8% in September, with 2027 growth at 2%, slightly above prior forecasts. Inflation forecasts were lowered to 2.5% for 2025 and 2.4% for 2026, remaining modestly above the 2% target.
