Fundamental Comment

US dollar slides as Fed minutes cite inflation lag concerns


The U.S. slipped against a basket of major currencies on Wednesday after the FOMC minutes for January policy meeting cited concerns about the lag of inflation to target.

The dollar index erased its earlier gains to trade at 89.50 as some Fed policymakers stressed on the risk surrounding the slowdown of inflation as it remained below the 2 percent target.

Some officials judged risks as balance, yet saw increased upside risks in near term.

Some members warned of imbalances in financial markets that may appear as the economy operates above potential.

Voters agreed that recent strengthening of economy increased likelihood of further gradual interest rate increases.

Most voters said recent data suggested modestly strong near-term economic outlook that was seen in December, especially as the tax overhaul will start to spill over in the economy.

While the recent data has signaled a stronger than forecast inflation, the rate is still below the central bank’s target, which dragged the dollar lower as policymakers may decide to postpone the next rate hike beyond March.

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