WASHINGTON, June 17 (UPI) -- The strength of the U.S. dollar fell Wednesday after the Federal Reserve hinted at fiscal policy movements that aren't quite what investors expected.
The ICE U.S. Dollar Index, which measures the strength of the currency against others, slid 0.74 percent Wednesday to 95.8810. The drop occurred after the Fed hinted that interest rate increases will be slower than many investors expected, MarketWatch reported Wednesday.
In its most recent monetary policy statement Wednesday, Fed policy makers said that even after employment and inflation have returned to desirable levels, the market climate might still keep benchmark rates below "normal" levels.
The Fed said it is not yet "reasonably confident" that inflation is rising toward target levels.
Federal Reserve chair Janet Yellen said Wednesday that the interest rates will remain low for a while still, as the impact of the 2008-09 financial crisis and its ensuing recession continue to affect consumers and investors.
"The message out of the Fed is that the U.S. economy is weaker than we thought in early 2015, but modest rate rises are still appropriate by the end of this year and the economy will be able to handle it," Matthew Sherwood, of Sydney at Perpetual Ltd., said in an email to Bloomberg Business Wednesday. "We may not reach the peak [of interest rate hikes] until end-2017, making this cycle the smallest and longest cycle on record."
Yellen did acknowledge, however, that household spending and consumer sentiment has rebounded from a sluggish first quarter.
The euro, meanwhile, strengthened to $1.1340 -- its highest level since late February, and Britain's pound rose to $1.5834, its highest level of the year so far, MarketWatch reported.
"The U.S. central bank may be opting for boredom rather than boldness, and that judgment is entirely appropriate in the high debt world we live in," Sherwood said.