US Dollar Index lurches higher after Fed’s Powell cools rate cut expectations

The US Dollar caught a risk-off lift on Wednesday after Fed Chair Powell tamped down rate cut hopes.
Citing slow-moving impacts on price volatility from tariffs, the Fed’s Powell cautioned that the Fed will continue to watch the data.
Rate cut hopes have dropped post-Fed rate call, traders now expect a rate cut in October.

The US Dollar caught a bid on Wednesday, climbing after Federal Reserve (Fed) Chair Jerome Powell cautioned that the Fed is unlikely to move interest rates lower unless the US central bank gets firm proof that inflation is set to continue easing, not rising on the back of tariff impacts.

Fed Chair Powell tamped down on expectations of immediate rate cuts, noting that despite the progress the Fed has made on inflation thus far, sticky price issues still remain. Fed policymakers are poised to wait for two additional rounds of both inflation and labor data before making a final decision to cut interest rates in September, cooling market hopes for a near-term rate cut.

Read more Fed rate call news: Powell says we have made no decisions about September