• Jerome Powell pointed out that the progress on inflation stagnated but that it was on track to the 2% target.
• He also pointed out that monetary policy needs more time to do its job and that a rate hike is highly unlikely.
• Markets are pushing rate cuts to year-end.

The US Dollar Index (DXY) tumbled to 105.45 on Wednesday following the Federal Reserve (Fed) decision to hold rates at 5.25-5.50% and Chair Powell’s cautious comments.

The US economy, despite facing inflationary pressures and a tightening labor market, maintains robust domestic demand as per Powell's observations. While registering progress, inflation remains high, leading to the Fed's cautious stance on its future trajectory. As for now investors are giving up their hopes on three rate cuts this year and are instead delaying the start of the easing cycle to Q4.