The US Dollar Index (DXY) tumbled to fresh intraday lows on Wednesday after the Federal Reserve (Fed) delivered a widely anticipated third straight interest rate cut, lowering its main policy rate to its lowest level in three years. Volatility widened sharply following the latest Fed rate decision as Greenback markets struggled to digest the Fed’s latest trajectory.
Federal Reserve Chair Jerome Powell held a cautious press conference following the Fed’s latest interest rate decision. He indicated that a third consecutive interest rate cut puts the Fed in a “comfortable” position to adopt a wait-and-see approach regarding additional data before making any definitive decisions on future rate changes.
While the Fed’s dot plot of interest rate expectations has broadened, the forecasts from the Federal Open Market Committee (FOMC) remain largely unchanged from the previous update. The median expectation among policymakers is for a single rate cut in 2026, followed by another reduction in 2027, before rates stabilize around their long-term level of approximately 3.0%.
The Federal Open Market Committee (FOMC) voted nine-to-three in favor of another quarter-point interest rate cut. One policymaker preferred a larger cut of 50 basis points, while two members opted for no cuts at all.
DXY 5-minute chart
Economic Indicator
Fed Interest Rate Decision
The Federal Reserve (Fed) deliberates on monetary policy and makes a decision on interest rates at eight pre-scheduled meetings per year. It has two mandates: to keep inflation at 2%, and to maintain full employment. Its main tool for achieving this is by setting interest rates – both at which it lends to banks and banks lend to each other. If it decides to hike rates, the US Dollar (USD) tends to strengthen as it attracts more foreign capital inflows. If it cuts rates, it tends to weaken the USD as capital drains out to countries offering higher returns. If rates are left unchanged, attention turns to the tone of the Federal Open Market Committee (FOMC) statement, and whether it is hawkish (expectant of higher future interest rates), or dovish (expectant of lower future rates).
Last release:
Wed Dec 10, 2025 19:00
Frequency:
Irregular
Actual:
3.75%
Consensus:
3.75%
Previous:
4%
Source:
Federal Reserve
