U.S. Dollar Advances Following Fed Minutes

After fluctuating earlier in the day, the value of the U.S. dollar has moved higher following the release of the minutes of the latest Federal Reserve meeting.

The U.S. dollar index is climbing 0.37 points or 0.4 percent to 104.55, once again reaching its best intraday level in over a month.

The greenback is trading at 134.96 yen compared to the 135.01 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is trading at $1.0602 compared to yesterday's $1.0648.

The advance by the dollar comes after the Fed minutes revealed a "few participants" favored raising rates by 50 basis points compared to the 25 basis point rate hike that was ultimately announced.

"The participants favoring a 50-basis point increase noted that a larger increase would more quickly bring the target range close to the levels they believed would achieve a sufficiently restrictive stance, taking into account their views of the risks to achieving price stability in a timely way," the Fed said.

The Fed members eventually agreed to raise the target range for the federal funds rate by 25 basis points to 4.50 to 4.75 percent.

The smaller rate hike came after the central bank raised rates by 75 basis points in November and by 50 basis points in December.

The minutes noted all participants continued to anticipate that ongoing rate increases would be appropriate to achieve the Fed's dual goals of maximum employment and inflation at the rate of 2 percent over the longer run.

The minutes acknowledged that inflationary pressures have moderated but noted price growth remains well above the Fed's 2 percent target, with labor market tightness contributing to continuing upward pressures on wages and prices.

"Overall, the minutes continued to underscore that the FOMC maintains a hawkish posture as its main goal is to significantly lower inflation," said Nationwide Chief Economist Kathy Bostjancic.

She added, "And this requires economic growth to be below its potential growth rate, which is estimated to be around 1.8%, for some period of time."

The Fed's next monetary policy meeting is scheduled for March 21-22, with CME Group's FedWatch Tool currently indicating a 79.0 percent chance of another 25 basis point rate hike and a 21.0 percent chance of a 50 basis point rate hike.

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